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.”

10 of the Worlds Most Powerful Trading Rules:

A thread🧵👇

2. Your trading system must be built on quantifiable facts not opinions.

3. Start with the weekly price chart to establish the long term trend, and then work down through the daily and hourly charts to trade in the direction of that trend. The odds are better if you are trading in the direction of the long term trend.

4. The more times a support or resistance level is tested, the greater the odds that it will be broken. Old resistance can become the new support, and the old support may become the new resistance.

5. Moving averages can quantify trends and create signals for entries, exits, and trailing stops.