Page 805 - How to Make Money in Stocks Trilogy

84 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

marry it. If you don’t think you can get something out of the transaction, you
have no business going in.”
Paramjit encourages other investors: “Don’t feel embarrassed if the trade
goes against you. It could be a lack of experience or problems in the overall
market. Everyone makes mistakes. Keep losses small; if you’re determined,
you’ll work through it. And remember to take most gains between 20 to 25%.”

• KEY POINTS •

• Create an investing business plan and review trades on a
monthly basis.
• Everyone makes mistakes. Keep losses small.

Have a Written Trading Plan

Steve Power has been an IBD subscriber since 2005. Although he under-
stood the system and made money over the years, he’s had ups and downs as
a trader. The main thing Steve struggled with is that he felt the need to
always be in the market. Now he realizes that there are windows of oppor-
tunity to capitalize on winning stocks, and there are periods of time when it
is best to step to the sidelines.
Steve didn’t really have a strong plan of action until his friend Tom Ellis,
an experienced CAN SLIM investor, suggested that he write down a spe-
cific trading plan and stick to a regular routine. Steve is a Senior
Representative for a multinational company, so most of his research is done
on the weekends.

Steve’s Weekend Routine

1. Watch list. This list includes approximately 10 to 30 leading stocks that
have the best fundamentals, such as double- or triple-digit earnings
growth, a high return on equity, and increasing revenue growth. If this
stock list becomes unmanageable because there are too many stocks on
it, create a second list for stocks that don’t quite meet the top funda-
mental criteria.
2. Buy list. This is a list of 1 to 5 possible actionable stocks for the week. In
some cases, buy triggers can be placed in advance of a breakout. In other