Page 562 - How to Make Money in Stocks Trilogy

• BON US CH A P T E R •

Test Your Knowledge

This bonus chapter will help you apply what you just learned in How to
Make Money in Stocks. The material is a fun and interactive way to help you
use some of the CAN SLIM rules right away to recognize the traits of win-
ning stocks.
Although we will focus on charts in this chapter, remember that what to
buy is determined mostly by fundamental analysis of such factors as earn-
ings, sales, and return on equity. The charts will assist you in figuring out
when to buy those fundamentally superior stocks. Selling decisions, how-
ever, are made mostly by looking at the charts. If you wait for the funda-
mentals to become poor, you will often sell late.
This bonus chapter has four main components to test your knowledge:
• Find the Chart Base. You’ll be asked to identify a base in the boxed area
of a chart and then you’ll flip the page to see if you’re right. This section
covers the three most common chart patterns: cup with handle, double
bottom and flat base.
• Would You Buy? You’ll be shown a chart and be asked “Would you buy
this stock?” Look for clues within the chart’s price and volume changes as
well as in the Relative Price Strength line. Decide yes or no, and then
turn the page to get the answer.
• Sell Signals. You’ll be asked to look for the sell signals that were discussed
in the book and then you’ll see the sell signals identified on the next page.
• 20 Questions. This quiz will test your knowledge on several key areas of
the CAN SLIM Investing System.

It’s OK if you don’t get everything right the first time. It takes a while to
learn to read charts. The more charts you look at, the better you’ll get at
identifying those stocks that have the characteristics of a big winner. Plus,
IBD offers many tools and educational opportunities to help you learn this
key skill; we’ll discuss these at the end of this chapter.

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