You must have a predetermined stop-loss, typically set at a maximum of 7-8% loss, to protect your capital. 5. Risk Management: The "Wizard" Mentality
Minervini argues that the same principles work in both bull and bear markets, but the application changes based on the overall market trend (which he determines using his "Trend Star" model, tracking major indices).
In the pantheon of financial literature, few titles carry as much weight with professional traders and retail investors as Mark Minervini’s masterpiece, Trade Like a Stock Market Wizard . The subtitle— How to Achieve Super Performance in Stocks in Any Market —is not a vague promise. It is a technical blueprint.
You must have pre-defined rules for cutting losses and protecting profits to ensure your account remains healthy. 2. Identifying the Right Phase: The Trend Template
The you are comfortable risking on a single trade? You must have a predetermined stop-loss, typically set
To achieve "Super Performance" in the stock market, you must transition from being a passive investor to a highly disciplined trader who prioritizes risk management and precise timing. Mark Minervini’s methodology, detailed in his seminal book Trade Like a Stock Market Wizard , is built on the system. This approach combines rigorous fundamental screening with technical analysis to identify stocks poised for explosive growth. 1. The Foundation: Specific Entry Point Analysis (SEPA)
Price | \ / \ | \ / \ /- Breakout Entry Point! | \ / \_ _/ | \_______/ \_/ | (C1) (C2) +-------------------------------------> Time Understanding Contraction
This is where the magic happens. The stock breaks out out of Stage 1, driven by stellar fundamentals. The price exhibits a clear pattern of higher highs and higher lows, trading well above its rising 150-day and 200-day moving averages. Stage 3: The Top/Distribution Phase (Top)
When a stock pulls back, it creates a series of contractions from left to right. Each successive contraction becomes shallower, and the time spent in each pullback shortens. For example, a stock might drop 25% (T1), rally, drop 12% (T2), rally, and then drop only 5% (T3). Volume and the Pivot Point In the pantheon of financial literature, few titles
Minervini uses a strict technical checklist to qualify stocks. A stock must meet all eight criteria to be considered:
Every major winner has a "story"—a new product, contract, or industry shift that excites investors.
: Place price alerts just below the pivot point so you are ready to trade when the momentum triggers.
Superperformance is not about achieving average market returns or indexing; it is about capturing exponential price moves in the shortest time possible. Minervini’s core philosophy hinges on the belief that stock prices do not move randomly. Instead, they move in highly predictable cycles driven by institutional buying. You must have pre-defined rules for cutting losses
Phase 2 — The Entry: Precision and Timing The book emphasized entry points, not buying because a stock is hot. Ethan adopted strict entry rules: buy at or just above the breakout point with volume confirmation. He learned about the Selections Rule: only take the most promising setups—don’t force trades. He began to think of himself as a gatekeeper who only allowed the highest-probability trades into his portfolio.
: Seeking a "story" behind the move, such as a new product, management change, or industry tailwind.
Driven by explosive earnings, revenue, and margin growth.
Superperformance is amplified by concentrating capital into the market's true leaders and aggressively compounding wins. Turning the Portfolio Over