Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market

Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market

by Mark Minervini

ISBN: 9780071807227

Publisher McGraw-Hill Education

Published in Business & Investing/Finance

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Sample Chapter


Champions aren't made in the gyms. Champions are made from something deep inside them—a desire, a dream, a vision.

—Muhammad Ali, three-time world heavyweight boxing champion

In the heat of competition, champions rise to their strengths, triumphing over mere contenders. Marathon runners win through superior endurance and a keen sense of pacing. The great flying aces of World War I defeated their enemies, winning dogfights by thinking faster and better in three-dimensional space. At the chessboard, victory goes to the player who sees more clearly through the maze of possible moves to unlock the winning combination. Virtually every human contest is dominated by the few who possess the unique traits and skills required in their fields. The stock market is no different.

Investing styles may differ among successful market players, but without exception, winning stock traders share certain key traits required for success. Fall short in those qualities and you will surely part ways with your money. The good news is that you don't have to be born with them. Along with learning effective trading tactics, you can develop the mindset and emotional discipline needed to win big in the stock market. Two things are required: a desire to succeed and a winning strategy. In Trade Like a Stock Market Wizard: How to Achieve Superperformance in Stocks in Any Market, I will show you how my winning strategy brought me success and how it can do the same thing for you.

I've been trading and investing in the stock market for most of my adult life: 30 years and counting as of the writing of this book. Stock trading is how I made my living and ultimately my fortune. Starting with only a few thousand dollars, I was able to parlay my winnings to become a multimillionaire by age 34. Even if I had not become rich from trading stocks, I would still be doing it today. For me, trading isn't a sport or just a way to make money; trading is my life.

I didn't start out successful. In the beginning, I made the same mistakes every new investor makes. However, through years of study and practice, I gradually acquired the necessary know-how to achieve the type of performance you generally only read about. I'm talking about superperformance. There's a big difference between making a decent return in the stock market and achieving superperformance, and that difference can be life-changing. Whether you're an accountant, a schoolteacher, a doctor, a lawyer, a plumber, or even broke and unemployed as I was when I started, believe me you can attain superperformance.

Success requires opportunity. The stock market provides incredible opportunity on a daily basis. New companies are constantly emerging as market leaders in every field from high-tech medical equipment to retail stores and restaurants right in your own neighborhood. To spot them and take advantage of their success you must have the know-how and the discipline to apply the proper investment techniques. In the following pages, I'm going to tell you how to develop the expertise to find your next superperformer.

Follow Your Dreams and Believe in Yourself

Impossible is just a big word thrown around by small men who find it easier to live in the world they've been given than to explore the power they have to change it.

—Laila Ali

Dedication and a desire to succeed are definitely requirements to achieve superperformance in stocks. What is not required is conventional wisdom or a college education. My real-world education began when I was an adolescent. I dropped out of school in the eighth grade at age 15, which means that I am almost completely self-educated. Yes, you read that correctly. I left school at age 15. I have never seen the inside of a high school as a student, let alone attended a university. What I did have, however, was a thirst for knowledge and a burning desire to succeed, to be the best trader I could be. I became a fanatical student of the stock market, its history, and human behavior. I started out by reading the financial news and stock reports at the local library. Over the years, I've read an incredible number of investment books, including more than 1,000 titles in my personal library alone.

In light of my lack of starting resources and formal education, the level of success I have achieved strikes some people as unlikely or even impossible. Along the way, some have even tried to discourage me. You too probably will face people who will try to dissuade you from trying. You will hear things such as "It's a rigged game," "You're gambling," and "Stocks are too risky." Don't let anyone convince you that you can't do it. Those who think it's not possible to achieve superperformance in stocks say so only because they never achieved it themselves, and so it's hard for them to imagine. Ignore any discouragement you may encounter and pay attention instead to the empowering principles I am about to share with you. If you spend time studying and applying them, you too can realize results that will amaze even the most ambitious positive thinkers. Then the same people who said it couldn't be done will ask you the question they always ask me, "How did you do it?"

And the Trade Shall Set You Free

From the very beginning, I saw the stock market as the ultimate opportunity for financial reward. Trading also appealed to me because I liked the idea of having the freedom to work at home and taking responsibility for my own success. In my young adult years, I had tried several different business ventures, and even though I felt enthusiastic, that burning passion was still missing. Finally, I came to realize that what I was most passionate about was freedom—freedom to do what I want, when I want, where I want.

One day it dawned on me: life is rich even if you're not. I realized that things were happening every day, good and bad, and that it was just a matter of deciding what I wanted to be part of. People were getting rich in the stock market. I said to myself, Why not be part of that? I figured that if I learned how to invest in the market and trade successfully, I could achieve my dream of financial freedom and, more important, personal freedom. Besides, who was going to hire a junior high school dropout? The stock market was the one place I could see that had unlimited potential without prejudice. The author and successful businessman Harvey Mackay said it perfectly, "Optimists are right. So are pessimists. It's up to you to choose which you will be."

Achieving the Best of Both Worlds

When I started trading in the early 1980s, I had only a few thousand dollars to invest. I had to make huge returns on my relatively small account to survive and still have some trading capital left. This forced me to hone my timing and learn the necessary tactics for extracting consistent profits out of the stock market day in and day out. Like a pro poker player who grinds out a steady living while consistently building a bankroll, I became a stock market "rounder."

My philosophy and approach to trading is to be a conservative aggressive opportunist. Although this may seem like a contradiction in terms, it is not. It simply means that my style is to be aggressive in my pursuit of potential reward and at the same time be extremely risk-conscious. Although I may invest or trade aggressively, my primary thought process begins with "How much can I lose?" not just "How much can I gain?"

During my 30 years as a stock trader, I've discovered that a "risk-first" approach is what works best for me. It has allowed me not just to perform or perform well but to achieve sup(Continues…)

Excerpted from "Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market" by Mark Minervini. Copyright © 2013 by Mark Minervini. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
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