Beth Marconi

Interview with Beth Marconi

Beth MarconiBeth Marconi is the Founder and CEO of LEVitrade, a program designed to help traders overcome the psychological and environmental barriers to trading successfully.   She has been trading stocks successfully full time for the past 7+years, generating positive returns and consistently outperforming the major indexes.

Beth developed LEVitrade to help traders elevate their performance but doesn’t do it with providing a new strategy or method. She does it by helping them remove the barriers that she has found hinders 9 out of 10 individuals who attempt to trade stocks from being successful. To be in a position to trade successfully, Beth has found that there are 3 key areas where one must find harmony: Lifestyle, Environment and Vision.

You may recall that I worked with Beth and her LEVitrade program (read my blog post about it here). She promised to keep in touch as she does with all her clients, checking in with me every so often to make sure I’m staying on track with her RoadMap or just to talk stocks!

What follows is a discussion on the ins and outs of LEVItrade and how it came to be, trading, and what all conversations usually end up being about, life.

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Mike: Let’s dive right in, can you tell us more about LEVitrade, what it is, and why you created it?

Beth: It started with me evaluating what it was about my lifestyle over the years that had allowed me to beat the odds as a trader.  However, and probably more importantly, I was reaching a point where I knew I wanted “more.”  This led me to design a platform where I am able to share my experience and knowledge in working with others who are looking to successfully manage a potential shift in their life, either personally or professionally.  You can relate.  Even though you hold a full time position that you value, the draw to help others achieve an understanding of the markets led you to launch CYT on the side.

Mike: Yes, CYT has been very rewarding for me and hopefully for my readers as well.  However, as you know, while CYT was ramping up I let my health take a back seat which led to a major wake up call.

 

Mike: When we agreed to work together I thought it was going to be all about my diet and exercise but it turns out it had more to do with organizing my time so I could better manage my stress.

Beth: Yes … most people would be surprised if they knew the extent to which the state of our mind effects the choices we make on a day to day basis.

Mike: Can you tell us how you discovered that the road blocks most people face have less to do with trading strategy or smarts and more to do with lifestyle, environment, and vision as you have based your program on?

Beth: Sure. Over the years, I have stuck to my plan of studying, analyzing and strategizing when it comes to trading. I’m a very analytical person and love to read, stay up on world events … so this process has always been something I enjoy and is what keeps me engaged in the trade. Yes, I love to make money, but if I’m not engaged in the process it would not be worth it to me. I value my time too much. So, after looking over my performance and noticing blips of time where my performance was not up to par, they all seemed to occur in time frames when my personal life was “off’ for one reason or another. It didn’t matter if we were in an uptrend or correction, my performance was reflecting how I felt about what was going on inside “me.”

 

Mike: How did you overcome it and how long did it take you to overcome it?

Beth: Ha!  This is an ongoing process, I believe, for all of us but having a vision of what I want for myself and my loved ones has been the key.  This is a process I have been refining over many years but I would say in the past 3+ years I have reached a place where I am “comfortable” in my own skin and know what it is I want and don’t want, which provides a “compass,” if you will and this is what I hope to be able to help others incorporate into their lives both personally and professionally.

 

Mike: What would you say had the biggest negative impact on your trading?

Beth: I would say the biggest impact on my trading that I needed to examine was letting my ego get in the way. This usually would occur if something else in my life was not in balance lending to my wanting to “make up for it” in a trade.  NOT a good idea!

 

Mike: What is the toughest thing you have faced as a trader?

Beth: Again, ego — not taking a loss sooner than later.  When I’m feeling good about myself, you know, eating “right,” exercising and on top of my “to-do” list, aka having my life in order, this frees me up to focus on what’s in front of me, what is real and not what I am hoping for in order to make up for something else that may be lacking or missing.

 

Mike: So it sounds as though it is these external factors that have little to do with the market that were having a major impact on your decision making in the market. Are you able to share one of these experiences?

Beth: I would be more than happy to share with you and your readers the set backs I’ve had personally and how I dealt with them but I would prefer to do so in a one on one basis.  My initial call that I offer through LEVitrade is complementary so there is no upfront monetary commitment to do so.

 

Mike: What do you feel is unique about the LEVitrade program compared to other lifestyle coaching programs?

Beth: There are many wonderful coaches out there! I believe everyone needs a good mentor, whether you’re a trader, investor or entrepreneur. This will allow you to get to where you want to go faster. What I see as my differentiator is I can relate to this group (traders, investors, entrepreneurs) as I live this lifestyle and can empathize, show compassion and offer an educated vision for how to move forward.

 

Mike: Do you see yourself giving up trading to coach exclusively?

Beth: No … I love the markets but I’m sure there may be a lot of people out there who, like me, may be feeling the need for more in their life and would do something about it if they only had a plan.  Also, someone to mange their investments, to free up the time needed to pursue other interests.  This is where I think our two offerings are highly complementary. I hope to be in a position where I am so busy with LEVitrade that I will not only subscribe to your services for direction and to save time but turn over my portfolio to you and your team at 50 Park Capital to manage.

 

Mike: That would be wonderful on all fronts! What is the best way for our readers to contact you?

Beth: They can reach me here: beth@levitrade.com to ask any questions or setup a call.  All of my work I offer is customized. I won’t put anyone through a pre-fab type of program as this is not my style. I want this process to not only be effective, but to be fun!

 

Mike: Thanks Beth!  Always a pleasure speaking with you!

Beth: Likewise!

Interview with Adam Sarhan

Adam SarhanAdam Sarhan is a +20 year market veteran, a Forbes Contributor, and is regularly quoted on CNBC, Fox Business, the Wall Street Journal, BARRONs, and a host of others.  He is also the Founder & CEO of 50 Park Investments and as of late November 2015, a proud partner of ChartYourTrade!  

We finally had the opportunity to sit down with Adam and pick his brain.  In the following interview, we’ll get to know him, his trading style, as well as what he finds that works best in the market and what doesn’t work well at all.  

 

ChartYourTrade: Adam, you’ve been running FindLeadingStocks.com for over 10 years and have provided a model portfolio for your subscribers to follow.  The model portfolio has been consistently profitable year after year.  You provided all of the trades ahead of time each weekend with exact entry and exit points.  Mechanically speaking, this should make it extremely easy for someone to follow or mimic the portfolio trade for trade.  However, it still may be challenging for some traders to follow due to their own personal psychology or when emotions get involved.  Can you speak to the emotional aspects of trading and in particular, following someone else’s trades one for one? 

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”] This was created by design. It was something that I wanted to see in the marketplace and just wasn’t there. At the beginning of my journey, (remember, I’m a self-taught student of the market and know how it feels to want to “learn” about markets) – I wanted to follow other people and “learn” from these experts. Unfortunately, I couldn’t find anything “good” out there. So I created FindLeadingStocks.com because I know (first hand) the value of good/useful information. Most people in the is business want to make a few bucks and are not intellectually honest. I’ve built my business by helping people, putting my best foot forward at all times and the rest followed. Most people in this business give 50 -100 “recs” (short for recommendations) then go out there and cherry pick the top 5-10 stocks. That doesn’t do anyone any good. What about the 90-95% of stocks that blew up? They don’t care, they just want to post here are our top 5-10 winners – look at these BIG gains (and all the other tacky marketing that follows). I’m not like that. I created FindLeadingStocks.com which is a weekly service that helps you make better decisions. Each week, when the market’s are closed, FLS members get specific entry and exit points with an exact percent to risk from entry (long and short). This way there is never any Monday morning quarterbacking or he-said she said with the ideas. In addition, to the model portfolio we provide at least 10 new setups (long and short). This way members can see a realistic easy to use watch list and don’t have to spend countless hours scanning the market. If they like anything from the trade setups page they can initiate the positions on their own and they can see (we provide annotated charts) exactly what I see and am focused on each week. The idea behind FLS is to empower you to make better investment decisions. Not to sell you subscriptions with tacky marketing. In fact, one could fault me for not doing enough marketing. I prefer to work with intelligent people who want good/useful information. All we focus on are liquid quality institutional stocks in FLS. We do not cover penny stocks or look for a quick buck. [/su_testimonial]

ChartYourTrade: What are some of the key aspects you look at when sizing up the market? 

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]Price is king, everything else is second. We all make or lose money based on one thing: The difference between our entry and exit price. Nothing else. So when I size up the market each week- I want to see how the market is behaving. I like to ask, The market is speaking, Are you listening? [/su_testimonial]

ChartYourTrade: What are some of the major buy and sell signals you take and under what circumstances? 

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]99.9% of the time I like to be aligned with the broader trend. Remember there are only three things any asset class in the world can do (stock, bond, currency, commodity, real-estate etc): Go Up, Down, or Sideways. In uptrends I want to be long, downtrends I want to be short and I tend not to take heavy positions in sideways (choppy) periods. Then I look for early (advanced) entry points to align myself with the trend. [/su_testimonial]

ChartYourTrade: Who are some of your greatest trading influences and why?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]There are a few private people who do a fantastic job consistently taking money out of the market.  They do not want to be mentioned publicly.  Otherwise, the normal “legends” come to mind, people like Livermore, Paul Tudor Jones, Bruce Kovner, etc.  [/su_testimonial]

ChartYourTrade: For someone just starting out who is attempting to trade part-time with little or no experience, where would you recommend they start?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]Trade small. Very, very, very small until you prove that you can consistently make money. Many people think they have to have a lot of money to start trading. The reality is, knowing what to do (when to buy and sell) is FAR MORE IMPORTANT. Would you operate on someone or fly a jet without getting a proper education? Probably, not. Why would you start trading without a proper education? Yet, people do it all the time.[/su_testimonial]

ChartYourTrade: How long do you typically hold positions?  Days, weeks, months, longer?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]I’m not like most people on Wall Street. I let the market guide me and I do my best to remain flexible (and humble) at all times. That means, by design, the market dictates my holding period. I always keep my losses small and do my best to let my winners run. Therefore, there are times where my holding period is very short (if the market moves against me and triggers my protective pre-determined stop) and there are times where I hold a position for several months. It all depends on what the market giveth. In general, I do my best work in the intermediate term time frame (weekly-monthly) and look to capture the bulk of the move, not pick a top or bottom. [/su_testimonial]

ChartYourTrade: Why do you trade?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]Great Question. In short, because I love the game. It keeps me sharp and is intellectually stimulating.[/su_testimonial]

ChartYourTrade: What do you trade?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]I run two strategies: A Global Macro (futures) Strategy and a long/short U.S. Equity Strategy. [/su_testimonial]

ChartYourTrade: What do you like most about trading and why?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”] * I love the intellectual challenge and flexibility that comes with this business. Markets are constantly evolving and it is like one big puzzle to me. It’s my job to figure out how to put the pieces together. Some people like crosswords or Sudoku. I prefer markets. There’s an infinite number of opportunities in front of us each and every day. It’s our job to spot the opportunity and capitalize on it.  My 4-year-old daughter asked me the other day: Daddy, what do you do at work? I told her, I play a game and help people get smarter.  [/su_testimonial]

ChartYourTrade: What do you like least about trading and why?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]There’s nothing I don’t like about it. If anything, they should give us more days off.[/su_testimonial]

ChartYourTrade: What do you find most difficult or challenging about trading?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”] For the first 10 years or so on Wall Street I found the hardest thing to do was keep things simple and wasn’t sure how to get out of my own way. I’m very analytical by nature and tend to over think things. My moment of clarity came when I realized that markets are neutral and largely a reflection of you. Most of you know of fundamental and technical analysis but I realized something was missing. So I developed Psychological Analysis for investing and trading markets. In short, we are all free to do whatever we want in markets. There are no “rules” per se. My only rules are: It’s 1. legal 2. moral 3. ethical and 4. Has a positive bias (it’s profitable).  Outside of that, we are all free to do whatever we want. So it is our job to find an approach that works for you. [/su_testimonial]

ChartYourTrade: What do you find easiest about trading?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]That’s a very good question. The easiest thing for me to do is follow my rules.[/su_testimonial]

ChartYourTrade: Do you like to do your own research?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”] I love it. It’s one of my favorite parts of the week. Doing my research allows me to stay sharp and keep my finger on the market’s pulse. I do my research on the weekend when markets are closed (that helps me remove my emotions from the decision making process and set up a game plan for next week). Then, all I have to do is follow my plan. My strategy is conservative in nature and I place a very strong focus on risk management. It’s a dry subject but very important. [/su_testimonial]

 

ChartYourTrade: What sort of research tools do you use?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]I read a lot and have built several in-house tools. I’m in the process of building MarketTerminal.com which will allow people to use these tools and, more importantly, make better investment decisions by accessing better information. [/su_testimonial]

ChartYourTrade: What do you like in a research tool?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]The market is VERY fragmented and it blows my mind that in 2016 we still have to go to several sources to find basic information. For example, if you want to find the strongest performing IPO’s in the last 2 years where do you go to find that information? If you want to search for the fastest growing companies in the past quarter or the past year? You’d likely have to use another source. I want to aggregate and simplify all this information into an easy to use tool for people to use. [/su_testimonial]

ChartYourTrade: What would you want to see in a report built just for you?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]Intelligent and actionable ideas. I don’t like reports that are 50-100 pages of “fluff.”  Traditional research is 50-100 pages long but doesn’t help you make money. [/su_testimonial]

ChartYourTrade: How much trading experience do you have?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]More than I want to admit. Over 20 years, I bought my first stock as a young teenager and have been following markets ever since. [/su_testimonial]

ChartYourTrade: Are you interested in trading education?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]Extremely! I know that I don’t know. Actually, I tell people that’s one of my biggest strengths. Humans are born in ignorance and we all spend our lives learning new things.  All of us received an education at some point in time. And people for the rest of eternity will need to be educated on all subjects, especially financial topics.[/su_testimonial]

ChartYourTrade: What do you do? 

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]Like I told my daughter: I help people get smarter.  * In 2004, I founded Sarhan Capital which is an independent firm that offers three main services: 1. Asset Management –  2. Global Macro Strategy and Long/Short U.S. Equities 3.  Institutional Advisory Service:  * Actionable Ideas For Professional Investors: AnalyzeWallStreet.com * Research:  * Actionable Ideas For Individual Investors: FindLeadingStocks.com [/su_testimonial]

ChartYourTrade: Any last thoughts?

[su_testimonial name=”Adam Sarhan” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/TlWg3Wvm_400x400.jpeg” company=”Twitter: @AdamSarhan” url=”https://twitter.com/adamsarhan”]You can do it. I honestly believe that we can all make a fortune on Wall Street. It’s not easy, but it is possible. The key is to be open-minded and find an approach that works for you. I see too many people who are committed to an approach that just doesn’t work. They spent years (and thousands of dollars) learning a “system” and have every “rule” memorized but never make any money. Einstein’s definition of insanity is doing the same thing and expecting different results. Sometimes it’s important to hold yourself accountable (which is not easy by the way) and change your approach if your “system” is not yielding the results you want. You are in control. Use that power wisely. Finally, I like to say, “Always keep your losses small and never argue with the tape.” [/su_testimonial]

Thank you so much, Adam for taking the time out to speak with us and in such great detail!  

 

If you would like to learn more about Adam Advanced Stock Reports, click here.

How Much Money is Needed to Begin Trading?

When I first entered the trading world, one of the first questions I and many new traders ask is “how much money is needed to begin trading?”  Sure, you can simply go to a broker and ask them what their minimum required deposit is and plunk that amount down…  That’s exactly what I did at first!  However, I quickly discovered that in order to begin growing an account, we often need far more than the minimum due.  

With small accounts of say $5,000 things like transaction fees and slippage can easily eat into profits especially if you have an active trading style.  Not to mention that attempting to grow a $5,000 even at a solid average annual rate of return of 20% would take approximately 18 years to grow to $100k.  

There are, however, several excellent reasons why you may want to start with a much smaller account.  For example, until you are consistently profitable, why would you want to risk more than the bare minimum?

I wish I knew then what I know now and that I had access to some experts that may be able to help get me started on the right foot and with the right expectations.  Well, we assembled a panel of expert traders to help answer these basic questions “how much money is needed to begin trading” and “what portion of one’s savings should this be.”

 

Our Panel of Experts include:

 

What do you think is the right amount to start trading or investing with and why?

Adam Sarhan “Everyone should answer this question based on their individual circumstance. Until you master your craft, I always recommend individuals to trade very, very, very light. This business is not easy and most investors (professional and individual) either loss money or can’t beat the market. So why commit a lot of capital until you have proven to yourself that you can successfully navigate both bull and bear markets?”

Angela Zhou “As little as $5,000, you can start investing since you can buy one or two stocks of companies which you’re familiar with and relate to your life, and keep watching their earnings and stock charts. For trading, I’d suggest that one starts with more fund like $20,000. Learning about basics of the stock chart and technicals is necessary, and it’s good to take advantage of fluctuation of the stock price and its trend when trading.”

chessNwine  “A famous poker phrase is that all you need to win is, “a chip and a chair,” which means there is basically no bare minimum as long as you have “something,” in the way of capital. If you are looking to trade as a hobby or want to start slowly, this is generally true. But to trade or invest seriously, a general $5,000-$10,000 threshold makes sense in order to account for realistic parts of trading and/or investing such as commission fees and inevitable losing streaks. But, again, new traders who want to learn and start small/slowly should absolutely not be dissuaded by an arbitrary starting number–The best way to get ahead is to get started!”

Christopher Ebert  “I don’t believe that there is any specific minimum amount required to begin trading or investing. So long as the funds are not needed to meet basic obligations such as housing or food for oneself or one’s family, there is no reason I can see that should stop an individual from contributing to a trading or investment plan. This is especially true when the individual can participate in an employer-sponsored retirement plan in which the employer may match a portion of the individual’s contributions. For those who want to delve a little deeper into active trading, it really takes at least $10,000 to be able to buy and sell stock in great enough quantities to be able to make worthwhile profits. Any less than $10,000 and fees and commissions will likely become a nuisance. Also, a trader can be enticed to take big risks in search of big profits when the account balance is too small; and this often leads to big losses when the trade does not perform as expected. Ideally a trader needs at least $25,000 to be able to dabble in stocks as a hobby or as a secondary source of income and will likely require in excess of $250,000 in order to generate enough income to meet living expenses and to survive draw-downs.”

Darrin Donnelly  “First, I think it’s important to differentiate between your trading account and your investing account. People who are investing for the long term with index funds, mutual funds, a Dogs of the Dow-type strategy, etc., should be very careful not to mix their long-term investing account with a shorter-term trading account. For a trading account, I tell people they should never risk more than they’re comfortable losing. Obviously, that number will vary from person to person. The point I try to make is that if you’re risking more than you’re comfortable risking, your emotions will get involved and you make a lot of bad trading mistakes.”

Doug Gregory  “If someone is unfamiliar with how the markets work I suggest an amount they can afford to lose. In any case I’d say a minimum of $2,000. That would allow someone to buy more than one stock at a time and would allow for a margin account. Ideally though I’d say $5,000+. If the goal is to invest for the future I suggest regular monthly contributions to one’s account. For example an initial $2,000 with monthly contributions of $250 at an annual 10% average gain would be worth over $1 million after 35 years. Of course if a person becomes proficient in the markets they should increase their regular contributions as their income allows.”

Evan Medeiros “When thinking about how much capital you need to get started, it’s going to boil down to your specific goals, so this will be different for everyone. Here are a few questions to ask yourself in order to point you in the right direction. Are you investing to grow your account over, say a 25 year time horizon, or are you trying to generate income to live off your profits week by week? How active do you plan on being? You can technically start investing with any amount, although brokers usually have a minimum dollar amount to open an account so be sure to look up the requirements. However one of the biggest headwinds small accounts face are the costs of trading commissions. For example, if you want to actively trade and you’re starting out with $500 and your broker charges you $7.95 per trade, there is absolutely no way you will make money under those conditions. On the other hand, if you’re trying to grow your savings over the long haul and are investing with a several year outlook with infrequent transactions, then $500 is completely fine. My recommendation is to open up an excel spreadsheet, input the number of trades you expect to make over a 30 day period, calculate the total estimated commission cost and then divide that number by the amount of starting capital you have. As a general rule, if that ratio is more than 5% per month then you need to trade less, have more capital, or find a cheaper broker. If your intentions are to generate cashflow to live off of, or you are interested in day trading, then you’ll need to at least meet the $25,000 minimum pattern day trading (PDT) rule. Earning a living from trading requires a great deal of initial capital, much more than most people realize. A very simple formula for determining how much you need is as follows. First you need to know what your average annual return is on a yearly basis. If it’s say, 15%, (and you can prove that with real results) then the only other variable in the equation is the amount of money you need to earn per year to live comfortably. For example, let’s assume you need $50,000 a year, with a 15% average return, you would need approximately $350,000 available trading capital to hit your goal.”

Gennady Kupershteyn “In my mind, there are no minimum amounts required to start investing. It takes a long time to learn how to invest correctly, so even starting with a few hundred dollars is better then not learning at all. Only day traders have to worry about having more then $25,000 to start because of the Pattern Day Trader rule.”

Ivan Hoff  “Start with a small amount, 4-5k. Chances are you are probably going to blow it off, 1-3 times before you actually learn how to make money from trading consistently.”

Jason Thompson  “The right amount of money to start trading or investing with is exactly what one can afford to lose. Scared money breeds anxiety, and which often in turn leads to poor decisions and ultimately will make you go broke. Most online brokers now don’t have a minimum to open an account unless options or margin is required then it’s around $2k and on up. So work hard, save up, and then start investing with capital you can put at risk. Remember it’s all about % return on each dollar invested not how many shares you can buy. Concentrating your efforts on the market’s most fundamentally strong and technically sound leading companies, and then buying what you can of them, is always the best approach to trading or investing. And while this is risk capital you never ever trade or invest without stop losses. When you’re wrong you admit it quickly and never take a loss of more than 7%. I highly recommend anybody first starting out in investing pick up a copy of “How To Make Money In Stocks” by William J. O’Neil. And then read it several times before committing dollar one to the market. As O’Neil says, “Read a chapter. Then go back and read that same chapter again.” This is the foundation you will build upon.”

John Mackel  “Only trade money you can afford to completely lose. Especially when starting, there will be more losses. I still look at those as my tuition for an education in investing that will benefit me for the rest of my life. Also, at the beginning of rallies, I like to be invested in four to five stocks. It is hard to trade around much of a position in even three stocks with less than $3,000. And if you don’t have more than $3,000 you can afford to lose, maybe its better to keep reading and speaking with your mentors until you have at least that much.”

Marco Di Dionisio  “Whenever I am asked what is the right amount of money needed to start investing. I answer the question with another question: What kind of investing are you looking to get into? I ask this because, in my opinion, there is a big difference between a long term buy and hold type strategy and active trading. A long term strategy can allow you to put money into a portfolio preferably made up of a mix of stocks and/or fixed income instruments to hold on to for 10 years or more. In this case, I would not be as shy in putting money to work. An amount such a $10,000-15,000 is a good starting point. My advice is to focus on sectors with positive long term outlooks. Don’t buy and sell too often so that you keep your costs down. Last but not least, ignore the noise. Financial media and pundits will drive you mad and harm the longevity of your portfolio by constantly putting doubts into your head regarding everything involving money. As for active trading, however, I become much more cautious.  Statistics show that a large number of new traders lose money consistently. There is a variety of reasons why this is so, but the one common denominator is that they end up buying and selling at the wrong moments. I would therefore tend to emphasize how you manage risk, first.  Do you have a plan before you enter the trade? Do you know at what point you were wrong in entering it? Are you capable of accepting a loss and actually exiting a trade when it goes against you? These are some of the questions you should be asking yourself before you begin active trading. The cash amount of money with which you start can be as low as $5000. Although it may take more time to grow that into a large sum, a sound risk management strategy can get you there even beginning with accumulating many small, but consistent wins and cutting your losses while they’re still small. Position sizing and exits are the two most important things to get a grip on. One thing I see all the time is traders attempting to make a fast buck or to make-up for a previous loss by betting big, with positions that are much larger than they should be. This is a sure fire way of cutting short the life span of your trading account. Knowing when to exit a trade is also key. Many new traders concentrate their efforts on the entry point. While it is important, your position size and your exit strategy will prove much more valuable to the survival of your portfolio in the long run.”

Mark Minervini “The amount to start trading with is a relative number. I started with only a few thousand dollars because that’s all I had. Of course if you want to be able to trade in and out at will, you will need to carry a balance of $25,000 or greater because you will be categorized as a “pattern Day Trader.” Optimally, if you’re just starting out, you should trade with real money as soon as possible. If you’re a beginner, you should start with an amount of money that is small enough to lose without changing your life, but large enough that losses are painful.”

Michael J Zoitas  In the past I believed the right amount to start trading was at least 25k. However I now realize that most new inexperienced traders should prove their strategy & learn how to grind. Learn how to take small loses & gain consistency. Learn how to navigate in all market types. This takes time & if 25k is a lot to lose than it will cause you to make poor decisions in tough spots. I would say you can start with as little as 2,000$ If your broker fees are cheap enough.”

Patrick Harris “My son called me last week saying he was ready to start trading and Investing. Here is what I told him. First- Doesn’t matter the amount we were discussing but the first thing I told him was to decide How much he was willing to risk. That surprised him a little because he had the idea all he was going to do was make money. Once you decide how much you can AFFORD to lose is the first step to trading or investing. Please notice how AFFORD is in bold print. If you can’t afford to lose your money it will affect the emotional stability you need to trade or invest. What I tell people is there is a lot of hard work to do to prepare yourself to even do it. It takes at least 3 months of webinars, courses, studying and practice trading before you ever Place your first trade. Then probably another month on how to CREATE a plan. It hard work because it’s a system of limiting your mistakes ( what I mean by that is your going to make mistakes) the key is making sure your on the proper side of things. Learn to do your own HOMEWORK- yes there is homework to do this. People have to know you don’t have to make a trade. Cash is a position. As far as an amount to Start with if your trading options, and you’re ready to trade options you can start with $5,000.00 10,000.00 if you’re trading stock. You need working capital to trade as it is the KEY to trading or investing. It’s called risk assessment and you will learn quickly what that is. Not every trade will go in your favor. Without overtrading not every trade will make you money. There is no set amount- it is just what I suggest.”

Rolf Schlotmann  “This is a very personal question since it depends on the current level of income, how well the trader can deal with real money swings and his level of risk appetite. I am a strong believer that people should not trade with small trading accounts of less than $3,000 – $5,000. The reason is that when nothing is at stake, traders will make undisciplined decisions and adopt gambling-like behavior which can be very hard to unlearn later on. Ask yourself, how serious can you treat trading with a $500 account when you only risk $5 or $10 per single trade? You might tell yourself you can treat a small account as if it was a big one, but you won’t.”

Shan Shan Xie  “First and foremost, beginners should start with paper trading until he/she can form a trading process before using real money. The amount that someone needs to have in order to trade or to invest will vary depending on the person’s financial stability. A $25k account will be sufficient for someone to get started in trading but the amount could increase drastically if someone is looking to invest with a longer time horizon.”

Steve Burns  “As an investor, I started with zero and grew it to multiple six figures, but it took time. The first step was saving and building up capital from smart, personal financial decisions.”

Sunrise Trader “For the purposes of this brief explanation let’s assume you are new to trading/investing and at this early stage in your trading/investing endeavor you have another source of income for your living expenses and all money you earn from trading will remain in the account until it grows to a sustainable level. Let’s get started. Most brokers have a minimum amount to open a brokerage account so at the very least this amount is what you will need to start trading/investing, your broker will set the limit for you. It may be as low as a thousand dollars up to 10K or more. The next thing you will need to consider is the amount of commission you will pay for each trade. Commissions are a cost of trading and can wipe out gains if you start with a small account. The more you actively trade the more commissions can impact your results and balance of your account. To make the math simple you start your trading account with $1,000 and you make 5 trades costing $10 commission. Your balance is now $950 this is a 5% loss before your stock purchases have had a chance to make you any money. I am amazed at how new traders only think about the money they will/can make vs thinking about how much they can lose trading. Your #1 job is risk management/money management. If you take the time to learn money management you will be ahead of 90+% of new traders in my opinion. You need to ask yourself and plan with this primary questions in your mind each time you place a trade: How many continuous losing trades can my account handle? How much am I willing to risk? What is my risk vs my potential reward? Now for some more math, you start with an account of $10,000 and you want to buy a stock that is trading at $50 per share how many shares can you buy? Hint: it is not 200 shares. First you need to decide how much per share you are willing to risk, you settle on $10, really? $10 x 200 shares = a loss of $2k or 20% of your account. Do this just a few times and you will see an account balance of ZERO. To find out how many shares you can buy you must calculate using a % of your total account. Traders who are successful will often risk up to 2% of their total account on each trade. 2% of 10K = $200 dollars. You now decide based on your stop what the risk per share will be, for this example your stop is $2 below the purchase price. You are willing to risk a total of $200 (2% of your total capital)/a stop of $2 means you can buy 100 shares. If your stop was $5 you can buy 40 shares. You may find that your risk tolerance is greater than 2% maybe for you it is 5%. I implore you to do the math based on your personal risk tolerance. Back to the question how much money do you need to start a trading account? Bottom line there is no easy formula and I cannot answer the question for you. I can tell you that trading takes time to learn, there is no holy grail and no perfect system. If you can spend time on learning a system, gaining an edge and perfecting money management/risk management you will be miles ahead in your trading career.”

Venky Srinivasan  “$10,000 for small traders is ideal to start with and for bigger intermediate anywhere from $100,000 – $250,000 is best. If you go to a prop shop, then $5,000 also will suffice.”

 

What portion of savings should this be? Why do you feel this is important and how did you arrive at this number?

 

Adam Sarhan  “Everyone is free to allocate any portion of their available capital (checking or savings) however they want. I always recommend someone start VERY VERY VERY light until they master the craft. See my answer to question 1 above. It’s very easy (and VERY Tempting) to dive head first into trading/investing because anyone can open an account and start trading instantly. The hard part is managing risk and successfully making money. Once you master those two elements of this business then you should commit meaningful capital. Until then, very light commitments (or paper trade) is a safer route. Why would you risk your capital and swim with the sharks without the proper knowledge and experience. I’ve seen way too many people lose way too much money in this business. Defense is king. What advice would you give your child if they said they want to start a business (trading/investing is a business) and they want to know how much to start what portion of their assets they should invest?”

Angela Zhou  “It varies according to your age, risk tolerance and financial foundation. Take no more than 50% of your saving, so this amount would not affect your lifestyle and health. I think working full time or even several jobs will help one arrive at this number.”

chessNwine  “I would say the better rule of thumb is to have at least six, if not twelve-to-eighteen months of savings set aside in cash off of which to live, pay bills, etc. It is essential to never speculate with the rent money, living expenses, money to pay bills, etc.. As tempting as it may be to set an arbitrary goal of making, say, 3% a week as a trader, in reality we are at the short-term behest of the market and all of its price swings. By definition, speculation is going to be streaky in terms of wins, losses, luck, etc.. Therefore, it is essential to have plenty of savings and indeed rainy day funds set aside to guard against this. To answer the question precisely, as long as there is money set aside, there is no set limit to the amount of savings one can use.”

Christopher Ebert  “I believe it is possible to invest 100% of one’s savings, if done properly. It is not so much the amount of the investment, but rather the risk of the investment that is important. The main reason that many folks fail to invest one iota of their hard-earned savings in stocks is because of the perceived risk. But over the past several decades new products have become available to the public; and these products are designed to mitigate the risk. Derivatives of stocks, such as stock options, are some of the widely-available products that now make it possible for the individual to define and control risk. But here again, just as with stocks, derivatives need to be used properly to get the desired result.. For an individual dedicated to a methodical, intensive nighttime and weekend study of stock options it is conceivable to eventually be able to invest 100% of one’s savings in the stock market without ever being exposed to excessive risk. The process may take a couple of years or more, but for anyone who is serious about trading in today’s stock market it really makes sense. Without some proven method of risk-control, whether traditional or through the use of stock options, I personally wouldn’t invest even 1% of my life’s savings. Without a way to control risk, the stock market is just a gambling casino, and probably not appropriate for life’s savings regardless of the percentage.”

Darrin Donnelly  “It’s just like starting a business and if you are serious about trading, you need to think of it like a business. You’re going to have to put some capital at risk and just like starting any other type of startup, there’s risk involved and you can lose your money. Don’t be naïve and reckless and think that it can’t happen to you. You have to be realistic. All the great traders I know of we’re very aware of the risks involved with trading and their first priority was to protect the money they had by limiting the amount they were willing to lose on any given trade. The good news is that there’s also great potential reward, just like with other startups. My trading hero, Nicolas Darvas, had an entrepreneurial mindset and he took his trading very seriously. He spent a lot of time reading books and doing research, just like one would do before starting any other type of business. He started trading with $30,000 and turned it into more than $2 million in less than two years. An amazing success story.”

Doug Gregory  “This depends on how knowledgeable and disciplined an investor is. Another factor is how active an investor will be in managing their account. A knowledgeable, active investor could put 70%+ of their savings into the markets. This does not mean that all the funds should be invested at all times. The disciplined investor should be in cash or short during downtrends. A more passive investor, while still needing to keep an eye on things, should probably risk no more than 30% of their savings in the stock market. This would prevent financial devastation in case one’s account goes South. It would also allow them to invest in other vehicles that may offer a higher return. For example, The SP 500 has only averaged +2.4% over the last 15 years. The passive investor may have been able to earn more elsewhere.”

Evan Medeiros  “When considering what percentage of your overall wealth should be invested in markets, you should remember to first, take it slow. Whatever you think you should invest, divide that number by 4, and prove you can make money before adding more to it. At the end of the day, you should only be investing money that is discretionary in nature and not needed to pay the day to day bills. The majority of your cash should be kept in low risk places until you have demonstrated the ability to invest profitably over the span of multiple years.”

Gennady Kupershteyn   “As a rule of thumb, new investors should not risk more then they can afford to lose. What percentage of savings that is, depends on the new trades risk tolerance. I would recommend starting with an amount that allows you to sleep at night and not worry about every tick. Keep in mind, risk too much, and you run the risk of becoming gun shy after a string of losses. Hampering your ability to enter and/or exit a trade at the right time. Loses are part of the business of investing, but emotional hesitation to buy or sell at the right time is dangerous for any portfolio.”

Jason Thompson  “” photo=”https://chartyourtrade.com/wp-content/uploads/2016/02/292603-FB_Chimpanzee-at-Typewriter-Posters_400x400.jpg” company=”Ticker Monkey” url=”https://tickermonkey.com”]The answer is ZERO. Never trade with savings as then they are not savings at all. You trade with risk capital only. How you arrive at that point is you start saving the minimum 10% of your salary each year and then add a “risk capital” allowance on top of it. Say you make $50k per year you’d save $5k putting 10% towards savings. Adding just an incremental 2% to that total you’d get $1k towards risk capital to deploy into the market. Scale that up or down to the amount you can afford. As time progresses and you become consistently profitable in your investing then I think it’s ok to transfer from savings an equal dollar amount of the PROFITS you have earned in the market as a way of rewarding yourself, and in effect “feeding your winner” as you would in a portfolio with a winning stock. So say you’ve saved $10k in 2 years and put an extra $2k away on top of that and put that “risk capital” into a trading account where you made a 10% return. I think you can then reward your good trading with taking $200 from the savings and putting it into the trading account with the $2,200 in there bringing your risk capital up to $2,400. For Successful Traders Only : Only when you become consistently profitable, extremely disciplined, and running your trading business as a business can you then loan yourself additional money from savings to trade with. Never borrow additional money from savings if you’re losing money! You’re obviously not doing what you’re supposed to be doing, or you’re in the midst of a very poor market. This is a loan for winning and you will then pay back into savings the money borrowed with interest of 10% with the profits you then make from trading. Profitable trading boosting back Savings plus some!”

Marco Di Dionisio  “Once again, in order to answer what portion of your savings this should be I would divide it into the two categories mentioned above. In along term investment account, I would allow putting a larger portion of your savings to work. I would at least 25 percent. In today’s world there really is no alternative. You’re not going to make anymoney by putting it in a bank. This is one of the reasons equity markets have done so well for the last two decades: a lack of alternatives. A long term investment portfolio can include a mixture of some equities, ETF’s, low cost index funds, dividend paying assets, fixed -income instruments etc. They should be checked upon every so often but not obsessively. Unless you see that you are garnering exceptional losses, let the positions ride. You can literally drive yourself crazy checking your portfolio every week if you’re in it for the long term. Furthermore, a well constructed long term portfolio may never requiring selling. For active trading in equities and options, on the other hand, I would only put to work an amount of money that you are willing to lose, atleast until you find a process that works for you and that makes you money on a consistent basis. In this case, I would suggest limiting the portion of your savings to 5-10% at most. Make sure you are consistently growing the amount you began with and not having to dip back into your reserves to continue trading. If that is the case, then you know immediately that you do not have a sound trading process yet and that you are putting your savings in grave danger. I’ve been trading and investing for eighteen years and only six years ago did I find a system that works for me on a consistent basis. That’s not to say that I wasn’t trading successfully before, but simply that there were always large swings in my portfolio’s P&L. I had some great trades with big wins early, but they were simply lucky bets. In time, I realized that my losses were also very large and sometimes big enough to wipe out the gains from several of my previous trades. This is not the way to go. I can’t stress this point enough. If you’ve made some easy money on lucky bets don’t let your ego get inflated! Also, do not mistake that for a hidden talent that only you apparently are in possession of. If this is your approach, you can rest assured that you’ll eventually encounter large, painful losses along the way. Although I believe suffering losses in trading are a necessary step in order to hone your system, they should be measured losses that keep your account alive while teaching you an important lesson along the way.”

Mark Minervini  “Optimally, if you’re just starting out, you should trade with real money as soon as possible. If you’re a beginner, you should start with an amount of money that is small enough to lose without changing your life, but large enough that losses are painful. Why? Because you need to get accustomed to trading for real because that’s what you’re going to have to do to make real money. Don’t paper trade unless you have no other choice. You can’t prepare for a professional boxing match by only shadowboxing. It is unlikely that you will make the same decisions with real money as you do with play money. It will only create a false sense of security and impede learning process. Start with what you can, but the key to learning how to be a stock trader is to trade.”

Michael J Zoitas “When you first start to trade you should have a very little % of savings if any in your trading account. I want only monies I can afford to blow up when building & testing a trade plan. This will ensure that They won’t quit trading when they lose all their money. Once a proven earner than I would keep around 25% of my savings. Investing is a different story all together. You can build your investment account slowly in quality names over time. I keep over 50% of my savings in my investment account. Always keep a set of rules or guide lines for each type of account. Meaning don’t turn your investment account into a trading account & blow up when the market becomes volatile.”

Patrick Harris “As far as a % of your savings don’t really have a percentage of Savings to advise people to start with the biggest thing to decide is what can you afford to lose if it was completely gone. Will it be the end of world or would it affect the way you live your life every day. This only you can answer. Once you decide all of that you have created your first Plan and you’re ahead of everyone else right there.”

Rolf Schlotmann  “Especially new traders should expect to lose their first account(s) and that’s the reason why you don’t want to put a significant amount of your savings into your first account. It will most certainly be your tuition you have to pay. We all know the saying “don’t trade with money you can’t afford to lose.” I think this is partly wrong. Your account has to be a size that will hurt you to some degree so that you take trading seriously, but not so much that you can still pay your rent.”

Shan Shan Xie  “For a beginner, the amount to trade/invest should be a very small portion of someone’s overall assets. Also, don’t trade with money that you can’t afford to lose. Rule of thumb is to have at least a year worth of rainy day fund. 

Everyone’s situation is different. But I firmly believe that someone needs to 1- Paper trade, paper trade and paper trade; 2- Start small/control risk; 3- Save up enough to weather the storm for at least a year when first starting out; 4- Don’t ever trade the money that you can’t afford to lose.

Trading is the hardest endeavor that I have ever encountered. It takes many years of focus, persistence and proper mentorship to achieve consistency. This is a marathon not a sprint, so start small and risk very little to get your feet wet. Learn the right trading process and gradually increase size.”

Steve Burns  “What portion of savings should this be? After saving 3 months of living expenses in an emergency fund, all my money went to my investment and trading accounts. My tax differed retirement account is my less aggressive, long term trend following account, which leaves my taxable account to use for day trading and swing trading. Why do you feel this is important and how did you arrive at this number? An investor can start with whatever they have and start accumulating positions inside a long term trend. An active trader needs at least $25,000, and preferably $30,000, to actively trade with the pattern day trader rule and ensure commission costs are not too high a percentage of their account.”

Venky Srinivasan “If you are starting as a new full time trader or transitioning into one, the most important thing is for one to determine what their primary source of income is and how much savings they have per month. Then the conservative approach that they can use is as follows: 1. Figure out all the expenses that you paid during the last 1 or 2 year timeframe. Ideally, 1 year will do. Keep that amount aside. 2. Average Rate of return in the market. Example: Yearly income: $200,000 Yearly expense: $50,000 Average return for last 5 years: 20% $200,000 * 20% = $40,000 Adjust your income accordingly on what you earn. In this example, you will need $200,000 plus an additional $40,000 for your first year and that is a total of $240,000. These are examples and approximate figures.”

Interview with Mark Minervini

Mark Minervini, one of America’s most successful traders, is a 30-year veteran of Wall Street. He is the Author of # 1 Best Seller Trade Like A Stock Market Wizard; How to Achieve Superperformance in Stocks (McGraw-Hill; April; Hardcover and eBook formats: $27). Minervini has been featured in national media including Fox News, CNN, CNBC, Bloomberg, the Wall Street Journal, Barron’s, USA Today, BusinessWeek, and more. For additional information, please visit http://minervini.com  He won the US Investing Championship in 1997 with an annual return of 155% and has also been featured in Jack Scwhager’s “Market Wizards.”

The ChartYourTrade Community was graciously granted the incredible opportunity to ask him a series of trading/investing related questions.  We took the Top 12 questions from our audience which did not overlap any of his prior interviews (click to see Mark’s interviews on NewTraderU.com run by Steve Burns: Interview 1, Interview 2)

 

CYT Community: For someone just starting out who is attempting to trade part-time with little or no experience, where would you recommend they start?

Mark Minervini: You should read as many books as you can. Find a style that makes sense to you; most importantly, something you believe in, because you will need a strong conviction to get through the difficult periods. All strategies have periods of underperformance and every strategy will require a period of time to go through a learning curve. In order to be successful at any strategy, you must commit to it; otherwise, you will only become a jack of all trades and master of none. To make big money trading stocks consistently, you need expertise and specialization. Find a style that suits your personality and then master it.

 

CYT Community: What does the basic outline of one of your written trade plans look like? 

Mark Minervini: The major elements of your trading plan should include:

  • An entry “mechanism” that determines precisely what will trigger a buy decision
  • The specific reasons why you’re entering a trade
  • How you are going to deal with risk; what will you do if the trade moves against you, or if the reason you bought the stock changes suddenly
  • How you’re going to lock in your profits.

 

CYT Community: A challenging aspect of trading is managing portfolio heat, especially in a strong market with many buy alerts going off. How do you manage this? Will you exit an existing winning trade in favor of a new breakout?

Mark Minervini: The goal of trading is to make a decent profit above the risk you take and do it over and over consistently. Worrying about getting the high or the low is fruitless and virtually impossible to accomplish with any regularity. Yes, I often will sell one stock to buy another. I may sell half of two stocks to finance a new full position. This way, I maintain my two positions and still get a new position on without increasing my overall exposure.

 

CYT Community: What percentage of fund ownership do you like to see in a stock (i.e. 20%, 60%, etc) Does the quality of fund ownership matter? If so, please explain.

Mark Minervini: I don’t mind companies that only have a small % of institutional ownership. I just don’t want to see too many funds in there and the stock getting too popular with the average investor. That could be an indication of a “crowded” trade. With smaller newer companies, you want to see institutional sponsorship increasing in recent quarters.

 

CYT Community: Recently you announced in twitter that you have a position in JACK. This particular stock shows negative sales quarters. What weight do you typically give to sales? Was there an exception made in this particular stock? Are there any other variables that you find outweigh the risk of slow sales?

Mark Minervini: A company can increase earnings from margin improvement, however, that will only go so far. At some point, sales are going to have to kick in. With JACK, it came out of a pretty nice base and was holding up relatively well. Without the sales kicking in yet, I have it on a short leash. If the stock price didn’t start moving up right away after my purchase, I would have probably just sold it. So far, it’s held up and I still own it. But, that could change very quickly.

 

CYT Community: On Twitter you mention that you have been increasing market exposure since Aug 15, 2014. If the market keep trending upward say for 3 months, will you be still making new stock buys or most probably just holding top positions?

Mark Minervini: If stocks are setting up and my current positions are working, I will entertain new buys. It’s when things are not working out well that I stop buying, or even sell off positions, especially if there are signs of distribution in the market.

 

CYT Community: What would prompt you to raise a stop? Where do you typically place stops that you’ve raised?

Mark Minervini: Once a stock moves up and make a new high after it goes through its first pullback or “natural” reaction, I usually start thinking about raising my stop. If I’m at a decent profit, then I’m going to protect my breakeven point more aggressively. I never want to let a good size gain go into the red. However, you don’t want to raise your stop too soon or you will choke off the trade.

 

CYT Community: Have you considered managing other people’s money? What advice do you have for an aspiring manager before starting down that path, positive or negative?

Mark Minervini: Right now, I’m not interested in managing other people’s money. I’m content running my own money, and I’m really enjoying helping others thorough my book and my educational services. If someone wants to go the route of money management, I would hope that they would have a track record of success running their own money first.

 

CYT Community: What elements do you consider the most important when sizing up the market? Leading stocks, major indexes, moving averages, distribution days (how many/what time frame) When do you move to 100% cash and when are you testing the water again?

Mark Minervini: The way stocks in my universe are acting is indeed the most important “indicator.” Not much else matters, because that’s what I’m trading. Even if the market averages are rising, if individual stocks are not meeting my SEPA® criteria, I won’t be able to take any positions. Once I’m invested, my stops force me out one by one. If I’m in cash, I start testing the waters when I see stock set-ups proliferate. I’m always watching the leadership.

 

CYT Community: What is your opinion about being in a new “Super Cycle”? Has this effected your trading at all? If so, how?

Mark Minervini: I’m not sure I even know what that means. Titles and labels lead to opinions. I try to keep my opinion to a minimum. I follow the stocks and place my buy orders based on when a company meets my SEPA® criteria. If there’s a bunch of names meeting my criteria, then it’s a good market. That’s really all I need to know.

 

CYT Community: Do you feel the market has changed at all since you won the US Investing Championship? If so, how? And how have you adapted?

Mark Minervini: Not much has changed. Things move faster because information flows faster. But, the market is the same as it was in 1930, and it will be virtually the same in 2130. Every 10 or 20 years, certain people like to say “it’s different this time” – usually to justify poor performance and make excuses. Trading is actually easier than ever.

 

CYT Community: There’s a fine line between being disciplined and sticking to a plan and being overly rigid with your plans. Do you allow for any gray areas in your plans to allow some flexibility/discretion? If so, can you provide some examples? If not, can you please explain why not?

Mark Minervini: When you have a sound methodology you want to be rigid with your principles, but flexible with your observations. The tactics you use to take advantage of fundamental truths may change, but the fundamental truths remain constant. Think of fundamentals as legs of a table. Regardless of what type of legs or material hold up the table, there are still four legs that maintain stability. If that makes sense?

 

Mike Lamothe: On behalf of the CYT Community, thank you so much for answering all of our questions directly and in such great detail!  

 

If you’d like to learn more about Mark Minervini and the methodology he used to win the US Investing Championship, start with his book “Trade Like a Stock Market Wizard,” by clicking here.

 

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