Page 861 - How to Make Money in Stocks Trilogy

124 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

Throughout the rest of 2002 and 2003, Ed read Bill O’Neil’s books multi-
ple times: How to Make Money in Stocks, The Successful Investor, and 24
Essential Lessons for Investment Success. These books were intended to
make the rules and guidelines register with investors in a deeper way.

Testing His Wings
In March 2003, a new bull market began, and Ed started trading stocks. He
quickly turned $50,000 into nearly $300,000 until the market corrected in
early 2004. Reading and understanding CAN SLIM Investing, however, was
entirely different than its application. By the end of the correction, because
he didn’t stay out of the market while it was heading lower, Ed lost every
penny that he’d made. When he did his post analysis, he realized that he did
not follow the CAN SLIM sell rules he had studied.
Ed spent the next three years of his life immersed in mastering CAN SLIM
and learning every detail he could about the system and how to use it effec-
tively. Besides studying, Ed also traded his own account and made “almost
every mistake that a trader can possibly make. The market can evoke emo-
tions in everyone, causing one to break rules, overreact, and make mis-
takes.” Because Ed had no mentors, he had to learn everything by trial and
error and experience. Instead of becoming disenchanted when he would
lose money on a stock, however, he would mark up a chart to see the reason
for his mistake. And he constantly reviewed them so he wouldn’t make the
same mistakes again.

Hitting His Stride
At the end of 2005, Ed had his first “big stock experience.” Ed missed out on
Google’s first two base breakouts, but when the stock gapped out of a base on
October 21, 2005, he bought what was a rather large position for him at the
time. He had studied models of past breakaway gaps of former leaders, and
he knew this was a high probability play, despite many pundits saying the
stock was overvalued. He spotted volume accumulation on a weekly chart
and saw the continued demand as it ran up. On January 20, 2006, Ed locked
in a large profit by implementing one of his sell rules, which is to sell a stock
if it breaks its 50-day moving average on heavy volume.
Ed noted, “Holding onto a big winner is sometimes hard, and that’s why
you have to know everything about a stock and a company, because if you
don’t know much about the product, its useful place in the market, why sales