Page 1259 - How to Make Money in Stocks Trilogy

More Tips and Tools for Getting Started Right 241

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2. Did the stock have CAN SLIM traits when you bought it?
Always start your search for tomorrow’s big winners by looking for stocks
that have the 7 CAN SLIM traits and the “big rocks” we discussed:
Focus on stocks that have big earnings growth, new innovative products
and are being heavily bought by institutional investors.
See the Buying Checklist (Chapter 3).
3. Did you buy at a proper buy point?

Most winning stocks launch their big moves as they break out of a cup-
with-handle, double bottom or flat base. If you don’t use charts to iden-
tify those money-making opportunities, you’re putting yourself at a
serious disadvantage. Charts prove that “timing really is everything.”
If you ran into trouble with the stock, go back and see if it passed the
Buying Checklist at the time you bought it:
• Did you buy too late—after the stock was already over 5% past the
ideal buy point?
• Did you buy too early—trying to anticipate a breakout?
• Was volume at least 40%–50% above average at the breakout?

• Was it a late-stage base?
• Were there serious flaws in the base, such as wide and loose action or
excessive distribution (selling)?
• Did you hold a stock because it had good earnings growth and a great
product—even as the stock fell lower and the chart flashed clear sell
signals?
Whatever the issue is, don’t dwell on your mistake—fix it! A good
starting point is to always make sure a stock passes the Buying Checklist
before you buy.
See the Buying Checklist (Chapter 3) and Don’t Invest Blindly (Chapter 6).
4. Did you follow sound sell rules?
Maybe your emotions took over, and you let a little loss become a big
one. Or maybe you sold too soon—and a stock you used to own went on
to huge gains without you.
That’s frustrating, but here’s the good news: All those issues can be
fixed by following some time-tested sell rules. And you can start applying
the most important ones right now by using the Selling Checklist.
See the Selling Checklist (Chapter 5).