Mark Minervini just released his latest book, “Think & Trade Like a Champion”.
When I first heard that Mark was going to release a new book last year, I got really excited. After all, Mark has succeeded in a big way where most have failed. And I enjoyed reading his other books, “Trade Like a Stock Market Wizard” and “Momentum Masters”.
So I had high expectation for this new book.
Who Is Mark Minervini?
In case you don’t know Mark Minervini, he is an independent trader who turned a few thousand bucks into millions of dollars. He won the 1997 U.S. investing championship with a cool 155% return, and from 1994 to 2000, he averaged a whopping 220% yearly return. That’s “only” a 33,500% compounded total return… He was also featured, along with many other trading legends in Jack Schwager’s “Market Wizards” book series.
As Jack Schwager puts it: “Most traders and money managers would be delighted to have Minervini’s worst year”
I had high expectation for this new book.
I’ve read roughly about a hundred books on investing and trading so far and I must say that only a handful of those books are actually worth reading, in my humble opinion. Most of the investing/trading books you can find have been written by academics and other authors who actually never made any serious money in the markets.
Well, after I finished reading Mark’s new book “Think & Trade Like a Champion” for the first time, I had only one thing in mind: to read it again, and again, and again.
This book went straight to my top 3 trading books. Actually no. My top 2.
It’s been a while since I actually learned something new from a trading book.
This book just blew me away. It is packed with trading wisdom and advanced techniques on strategy, risk management, trading mindset, …
What To Expect From The Book
Like his first book, this new book also starts with a great introduction that will supercharge your motivation and trading mindset.
“Persistence is more important than knowledge, and victory comes to those who persist, as long as you are learning from your experience.”
The book contains 11 chapters:
- In the 1st chapter, Mark explains the importance of having a trading plan
“If you don’t have things thought out before going into a trade, then you will likely rationalize and you could be gripped with indecision at the moment you need to act swiftly.”
- In the 2nd chapter, Mark reminds us about the importance of having a risk-first approach to trading and explains why cutting losers short is the most important element in trading.
“Not losing big is the single most important factor for winning big. As a speculator, losing is not a choice, but how you lose is.“
- In the 3rd chapter, Mark dives into positive expectancy from a mathematical perspective.
“Your theoretical assumption on one trade or several trades may be excellent, and even work out as expected. But your performance is going to be driven by the results that you are producing over time on average.”
- The 4th chapter goes in details about how to discover the truth behind your trading and use it to become consistently profitable
“If you don’t know the kind of gains you’re making, how will you know how much you should risk? You might as well sling darts at a dartboard – blindfolded!”
- In the 5th chapter, Mark goes through several of the main mistakes traders make, that keep them from being able to compound their money
“In the stock market, when bad habits get rewarded it leads to ruin.”
- Chapters 6 & 7 are dedicated to Mark’s SEPA strategy. He delves into what he looks for before entering a trade.
“When you evolve to the point of always being patient and only taking quality trades, that means you’ve decided that you’re not in it for action, but to make money. You’re a pro.”
- Chapter 8 is a nice addition to his first book, “Trade Like a Stock Market Wizard”. The subject of position sizing was missing in his first book. It is now covered in this chapter
“Use the math of your results as a tool, and hone your edge by calculating the amount of risk you should be taking based on your own performance”
- Chapter 9 is about the most important aspect of trading, which is the art of selling. When to sell when at a loss, and when to sell when at a profit
“You’re almost never going to get the highest price, but it’s not necessary to do so to achieve super performance. […] Instead of worrying about selling at the high or buying at the low, concern yourself with what trading is about: making a good size profits and repeating it over and over.”
- Chapter 10 covers 8 very important principles for success in trading that go against conventional wisdom.
“If you wants big returns in the stock market, you want to learn how to accomplish two things:
1- Make big money when you’re correct
2- Avoid big drawdowns when you’re wrong”
- Finally, Chapter 11, is a great interview of Jairek Robbins (Tony Robbins’ son) in which he and Mark shared many practical tools for approaching the markets with a better mindset.
“ ’I want to generate superformance and make millions of dollars, but I never want to put in the time to learn or do the homework”. That’s like saying, ‘I want to be in the NBA, but never practice basketball’ ”
What I Really Liked
Treat trading like a business
This second book reveals even more the astounding degree of professionalism Mark Minervini puts into his trading.
You often hear about always having a trading plan. Well Mark even has a disaster plan, in case something totally unexpected happens, like a huge gap down, a power outage, or if the Internet goes down.
Evaluating all the different possible scenarios and knowing what you will do in each scenario will allow you to act rationally when under fire.
Understand the maths behind your results
I’ve been analyzing my past trades religiously every single year for the past 3 years. This is how I went from losing money year after year, to being able to make money consistently.
Funnily enough, it is Mark’s interview in “Stock Market Wizards” that inspired me to do so.
In his new book, Mark goes really deep into how to analyze your results, and all the different variables you need to monitor on a regular basis in order to make sure that you always keep a mathematical edge, a positive expectancy, based on your real-time results, and not on an hypothetical estimate.
This part was just eye-opening… I’ve integrated this system right away into my trading process.
I now not only fully understand how and why I’m profitable, but I now can know exactly when my expectancy starts to drift and when to fine-tune my risk management rules in order to always make sure I’ll make money.
I think most traders just try to hit home runs. That was definitely my case. This allowed me to make a lot of money when I was right, which not only paid for my small losses, but also generated profits.
However, I’ve never questioned my strategy. That’s until I read in this book a simple yet powerful fact: “8 trades that produce a 10% profit will more than double your money”. My own strategy is based on finding fat pitches, stocks that have the potential to go up at least 2 folds. Yet, it is much easier to find 8 trades that produce a 10%, than find one big trade.
That is not to say that one should only aim for small wins. Because small wins can easily shift your expectancy from positive to negative. However, maybe, one does not need to only aim at fat pitches and could actually compound his money faster with smaller wins and higher frequency.
The mindset of a successful trader
Mark does a great job at emphasizing why mindset is everything in trading. With the right mindset, you will be able to cultivate the persistence needed to go through the ups and downs of the learning curve, without giving up. The interview with Jairek Robbins in the last chapter gives invaluable advice on how to develop the discipline to stick to your trading plan, how to accept losses, and how to develop a winner’s mindset
Advanced trading techniques
Mark is very generous in this book and he shares many of the advanced techniques he uses in his own trading, such as advanced stop losses strategies, position scaling techniques, using small wins to finance larger positions, reallocating some capitals from poor performers to better ones, selling into strength…
He also finally wrote a most awaited chapter on position sizing which allowed me to improve my own strategy by increase my exposure and potential profits, without actually increasing my risk.
What I Didn’t Like
There is nothing I didn’t like.
However, there is one more thing I would have liked to see in that book.
The book doesn’t include how Mark finds potential candidates, what screener does he use.
Now that said, given the amount of secrets he reveals in this book, I can’t really complain.
Who Is This Book For?
In all honesty, although it has been written by a master focused on swing trading stocks, this book literally is for every type of traders out there.
You may be a stock trader, or a forex trader, or an investor, day trader, beginner, professional trader, … Everyone will find something in this book that has the potential to turn you into a profitable trader, or to dramatically improve your performance.
Beginners will learn about the basics of successful trading such as why they have to cut their losses short, the importance of having a trading plan, why they should not diversify, the risk reward ratio, the basics of becoming profitable, …
Advanced traders of any asset class, securities, and time frames will discover how they can seriously improve their trading performance by monitoring the maths behind their results, how to better position their stop losses, how to sell into strength and weakness in a way that makes mathematical sense, …
Again, I read a hundred books on trading. “Think & Trade Like a Champion” belongs my Top 2.
I’ve now read this book 4 times already and I just can’t comprehend why this book is so cheap.
Given the dramatically positive potential impact this book can have on your trading, the reward-to-risk ratio of buying this book is just incredibly skewed to the upside!
My advice: BUY IT hand over fist!