Mark Minervini - Webinar Notes

Mark Minervini: “Keys to winning in the Stock Market” Until the right opportunity emerges, I pay special attention to preservation of capitalabove capital appreciation. When a promising opportunity eventually presents itself, I’mready to act swiftly and aggressively with the bulk of my capital intact.Remember, the top three priorities in trading: First, is preservation of capital. Next isconsistency in executing your plan. When you have these two things mastered, youcan then pursue the third, which is superior performance. In stock trading, waiting is the hard part. While you are sidelined, reading latest newsor watching the Dow move up may pressure you to make trades that you wouldnormally not take. Patience is the key. Daily surveillance is necessary, whilesuppressing the temptation for action, meaning the desire to initiate a trade, untilthe right opportunities present themselves. I conduct intensive research to identify trading ideas and follow those ideas like a hawk.When the time comes to put money to work, the decision is be automatic and obvious. Totrade like this, in almost a Zen like manner, you must trade when the conditions arefavorable. Trading should be effortless. If your trading is causing you difficulty or stress,then something is wrong with your criteria or timing, or else you’re trading too large.When the market is not acting great and there’s no clear market leadership, play it smallwith pilot positions. This accomplishes two things:First, you will test the market and keep its pulse. Once you get a strong heartbeat, you canstep it up.Second, you stay in trading shape. Trading is just like working a muscle; if you don’twork it, it loses strength.Stay in trading shape by using pilot positions as “sparring partners.” However, don’t slugit out and get hurt with your sparring partner. Instead, wait for the main event and thengive it your all to capture the championship belt. Sacrifice : Must know who you are and what you will be doing- A successful Trader willneed to establish their edgeStatus: Do you want to be a Hyundai or a Mercedes?The average trader spends the majority of his/her time in between Indecisiveness <<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>> Regret S h o u l d I b u y I s h o u l d h a v e b o u g h t S h o u l d I s e l l I s h o u l d h a v e s o l d S h o u l d I h o l d I s h o u l d h a v e h e l d 50% win rate is enough KEY Point: Perfectly executing your plan is the key, not perfectly trading the stock

It is a business of being wrong- How you manage this determines your success.  Discipline  Process  following game planEGO: do you want to make money or be right? A destructive Force inside all of us.  Don’t focus on $... Focus on Process  Money is the Scoreboard  Scoring is a by-product of successful speculation.  Focus on being the best you can be  Focus on implementing sound principles  Focus on implementing your plan consistently Master one Style Multi-tasking hurts development and confidence  Master one style  Master one strategy w/in that style  Master one tactic w/ in that strategy within that style  Develop a consistent routine (like the military. “SOP” standard operatingProcedure”  Become profitable first (most traders set unrealistic goals)Trading Priorities:Preservation of CapitalHow much can I lose (consistent application of discipline)Consistent ReturnsSuperior ResultsHave a contingency Plan for every situation before it happens  Initial stop –loss must be determined beforehand- It should always be a functionof expected gain “R”  When to take profits A) Into Strength B) into weakness  Re-Entry Plan- some of his best trades have been from previous failures  Disaster PlanReasons many fail to achieve superior Results  Poor selection Criteria  Style Drift

 Failure to cut losses  Averaging Down  Let good gains slip or even worse turn into a loss  Seeking Action- trading is supposed to be boring(Missed 7-10- I sent him a message to get the bullets but have yet to hear back)SACRIFICEPractice does not make perfectConventional wisdom guarantees mediocrityYou will have rotten days Position Sizing:  He has and will put up to 25% in one position  His goal is to put as much capital as he can in his best ideas  He will risk 1-2% of equity per trade  Avg Stop/loss 4-5%  Max Stop would be 10% (only breached on nasty gap down)  Smaller positions if stock is thin  All you have is your entry- Your stop is only as good as you are at setting it.  Max Positions – 12 (unless they r small caps and he has smaller positions)  In ideal situation he can have 8 positions- fully margined.Must do best to take emotion out of playHave a plan and contingency planHe would rather lose following his plan than win outside his competencyHe uses no indicators: Focus only on Price, Volume and a few MA’s just for reference