Last Updated on July 22, 2022 by Oddmund Groette
Mark Minervini is an acclaimed author, technical analyst, instructor, independent trader, and the Founder of Quantech Fund, LP. He has more than three decades of experience in finance and was featured in Jack Schwager’s Stock Market Wizards; conversations with American top stock traders.
Mark Minervini’s trading career:
Mark’s interest in the stock started in the early ‘80s when he was a teenager. His early attempt soon grew into a full-time obsession. He sold his studio and used the proceeds to fund his trading account.
He lost everything in the beginning — a bitter experience for him. But he realized that his worst mistake had been depending on other people for tips, so he decided to learn it his own way through self-education and research.
He bought his first stock — Allis Chalmer, a seller of tractors and forklifts in 1993. Afterward, Mark became familiar with the works of Richard Love, the author of super performance. His professional and philosophical perspectives on investments together with the creation of his investment strategy was greatly influenced by Richard’s book.
After almost a decade of research and market experience, he developed a well-defined trading strategy. By mid-1994, Mark converged all his accounts into a single account that became his track record. (Initially, he had several accounts, which he used to test and compare different strategies).
Mark’s performance (after he developed his trading strategy) improved dramatically, with a record 220% annual compounded return for five consecutive years.
He finished first in the 1997 U.S. Investing Championship with a 155% return. He achieved all these gains by keeping risk low — he had only lost a fraction of 1% of his account. His worst year saw a return of 128% gain — a gain that most money managers and traders would be delighted to have as their best.
He usually held his trade for a long time and normally bought when he thought the price would rally within an hour or a day at most. Also, he avoided penny stocks — stocks that are low are usually low for a reason. He tends to prefer stocks that are trading at $20 or higher; he never bought a stock that is under $12.
His basic and main trading philosophy is this: expose your portfolio to the best stocks the market has to offer and cut your losses very quickly when wrong.
This philosophy best described his strategy. He went further and said many investors missed out on good stocks because they limited their selections to stocks with low P/E ratios. Unfortunately, avoiding stocks because the P/E ratio seems too high will result in missing out on some of the best growth stocks, which are actually the stocks that move the market.
Mark spends his days managing money and his nights analyzing companies’ fundamentals on his computer. His main reason for trading was to simply support himself financially from his profits, but his precise trading strategy increased his wealth exponentially each year. He currently runs an educational website and forum where he shares his knowledge with other traders and analysts.
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Trading strategy quotes from Mark Minervini:
Below are a few quotes from Mark Minervini we have taken from his Twitter account and Jack Schwager’s Stock Market Wizards.
I think paper trading is the worst thing you can do. If you are a beginner, trade with an amount of money that is small enough so that you can afford to lose it, but large enough so that you will feel the pain if you do. Otherwise, you are fooling yourself.
The fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions.
I think that anyone who wants to be a trader should learn how to play poker.
The key is to know when to do nothing.
Being wrong is acceptable, but staying wrong is totally unacceptable.
Previous hands mean nothing. The current hand determines the probabilities (on poker).
I noticed that the winning trades usually worked from the outset.
Not losing big is the single most important factor for winning big. As a speculator, losing is not a choice, but how much you lose is.
Most people cannot weather the learning curve.
Long-term success in the stock market has nothing to do with hope or luck. Winning stock traders have rules and a well-thought-out plan. Conversely, losers lack rules, or if they have rules, they don’t stick to them for very long; they deviate.
My desire to be the best trader is greater than my desire to take a break.
Expectancy is your percentage of winning trades multiplied by your average gain, divided by your percentage of losing trades multiplied by your average loss. Maintain a positive expectancy, and you’re a winner. My results went from average to stellar when I finally made the choice that I was going to make every trade an intelligent risk/reward decision.
Losers average losers.
If you want to be the best, you have to do things that other people are unwilling to do. —Michael Phelps, winner of 17 Olympic medals.
Virtually every super performance phase in big, winning stocks occurred while the stock price was in a definite price uptrend. In almost every case, the trend was identifiable early in the super performance advance.
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