William J. O’Neil’s 10 trading principles that made him a fortune and a legend:

A thread 🧵👇

He sells a stock he is holding after it has gone down 7% from his purchase price.

“I make it a rule to never lose more than 7% on any stock I buy. If a stock drops 7% below my purchase price, I will automatically sell it at the market – no second-guessing, no hesitation”

One of the major keys to his profitable trading was only having small losses when he was wrong. 

“The whole secret to winning in the stock market is to lose the least amount possible when you’re not right.”

William O’Neil studied historical chart patterns relentlessly and read thousands of trading books.

“90% of the people in the stock market, professionals and amateurs alike, simply haven’t done enough homework.”

He invested in an industries leading stocks not its laggards and dogs.

“It seldom pays to invest in laggard stocks, even if they look tantalizingly cheap. Look for, and confine your purchases to market leaders.”

Ten lessons from the book “Trend Following” by @Covel

A Thread 🧵

“There are 4 kinds of bets. There are good bets, bad bets, bets that you win, & bets that you lose. Winning a bad bet can be the most dangerous outcome of all, because a success of that kind can encourage you to take more bad bets in the future, when the odds are against you.”

“We’re trying to exploit people’s reaction, which is embedded in prices and leads to trends.”

“Our best trading days are when we don’t trade.”

(Letting winners run or waiting for the right entry signal).

“Clarify trading and risk management systems until they can translate to computer code.”