Page 808 - How to Make Money in Stocks Trilogy

86 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

cases, the buy may be dependent on further base development. Try to
keep at least one stock on this list. The most difficult thing is to keep this
list small when a bull market is raging. Remember to streamline the list
down to the very best stocks that you can find.

3. Breakout list. Keep track of stocks that break out from your watch list
whether you bought them or not, and keep track of how they perform.
This is a good indicator of overall market health.
4. Stops. Update stops (the price at which a stock would be sold if the trade
doesn’t work out, no more than 7 to 8% below the purchase price) on the
spreadsheet weekly.
5. New additions to watch list. Download and review the IBD 50 for new
ideas twice a week. Run 1 to 2 MarketSmith screens looking for stocks
with top earnings and sales.
6. Maintain records. Write in a market journal at least once a week and
every time a trade is made. Record trades in a portfolio performance
spreadsheet, and keep this updated to determine market exposure, risk,
profits, and so on.

Steve’s Daily Routine

1. Read The Big Picture column, and check the overall market trend.
2. Check stock lists (watch list, buy list, breakout list).
3. Record trades, and update portfolio of positions currently held.
4. Reprioritize the list with potential buy points if watch list stocks are
preparing to break out.
5. Set buy or sell triggers with your broker if a new stock appears that you
want to buy or if a stock that you own flashes a sell signal.
6. Read IBD articles for new ideas.
7. Write in a market journal every time a trade is made.

Steve says the system “works well when applied correctly. I try to make
trading as mechanical as possible to take the emotions out of it.”

From Running a Pension Fund to Individual Investing
In the 1960s, Kent Damon worked as a security analyst for First City
National Bank of New York, now known as City Bank. After that, Kent was