9 DEEP SHARES OF LEGENDARY TRADER MARK MINERVINI
Mark Minervini spent the first 7 years before he could officially step into the path of a professional trader, but more than 30 years later, he has made a great name in the trading world by earning tens of millions of dollars in the financial market, winning the U.S. investing championship in 1997, and being interviewed in Jack Schwager's Market Wizards. Mark Minervini's success did not come by chance; it is closely tied to principles, discipline, and perseverance.
Below are 9 principles associated with over 30 years of trading process of Mark Minervini that help him achieve long-term profits in the market:
🎯1. Always trade with a stop loss: This is the first rule, which is to always have a stop loss. If a trade does not have a stop loss, then no matter how good the strategy is, it is still a bad trade. He strictly adheres to this principle. Stop losses limit risks and protect accounts from significant losses. Initially, the stop loss may be set incorrectly, but once the strategy is better understood and skills are improved, the way to set stop losses will gradually become more accurate.
🎯2. Determine the exit point before entering a trade: For experienced traders, the exit point is even more important than the entry point, as it determines the profit of the transaction. By determining this point, traders will be more proactive and manage trades better. Otherwise, traders can easily become passive and anxious, leading to losses, even when they are currently in profit.
🎯3. Never accept a risk greater than the profit: This means the risk-reward ratio should be as large as possible; the trades executed need to have low risk but high profit. This is how successful traders build a long-term trading advantage in the market.
🎯4. Take partial profits when the trade goes in the right direction: Knowing how to protect profits is also a factor that helps Mark Minervini achieve long-term profits. Most traders prefer to hold on for a long time or like to take profits too soon, thus failing to retain profits. Experienced traders will take partial profits to reduce their risk when the market moves in the right direction, allowing them to confidently hold long-term trades to earn larger profits.
🎯5. Do not add positions when trading is losing: This is an important principle; traders must always prioritize risk. When trades are losing, most traders have a psychological tendency; if they do not manage risk and add to their positions at this time, not only is there a possibility of incurring heavier losses, but their psychology will also be under more pressure. Each additional position adds a certain level of risk. Therefore, when losing, do not add any positions unless the risk remains within an acceptable limit.
🎯6. Never let a profitable trade turn into a loss: Another essential principle in Mark Minervini's important principles is to know how to protect the profits earned. Many traders, out of greed, want to earn more and keep their positions open for too long until the market returns the profits or even incurs losses. Therefore, knowing how to protect profits and knowing when to exit a trade is a very important principle.
🎯7. Do not average down: this is a risky trading method that not only requires good skills and stable psychology but also good capital management techniques. However, in reality, most traders use this method out of greed and do not manage risk tightly, resulting in significant losses. There are many other ways to earn profits that are both safe and promising, and professional traders do not use this trading method; instead, they mostly trade according to major trends.
🎯8. Do not force yourself to trade: Many traders think that trading more will yield more profits; they force themselves to trade daily even when the market has no signals. However, trading more leads to greater risks, especially when trading is forced. Understanding your own advantages and knowing when to trade and when not to is crucial for achieving success. Only trade when you have an advantage is the way traders achieve long-term profits in the market.
🎯9. Do not accept large losses: Knowing how to accept losses within a certain limit is a very important principle in trading. If you are not greedy, you will not be afraid. If traders know how to accept losses at a low level, their trading psychology will be more stable, the trading process will be more comfortable, and importantly, they will be able to focus on many other more important tasks once they understand the risks they must bear.
This is precisely 9 principles associated with Mark Minervini throughout more than 3 decades in the financial market. These are all important principles and not too difficult to implement. You should try to apply them in your trading process.