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Black Belt Trading: Investing Like a Pro 177

eral buy and sell rules based on the market’s price and volume action to give
us a guideline for how deep to be invested. We knew that a follow-through
day would get us in the market. And a lot of distribution days would signal a
top. But the problem was the period of time in between a market bottom
and a market top. Bill has a great sense for how deep to be invested based
on his decades of experience, but we aren’t Bill. So with countless hours of
back-testing, we came up with a set of rules that work extremely well. Our
goal was to be in line with how Bill trades and looks at the market.”
A product that Mike didn’t work on but that he really likes is Chart
Arcade. He said his 10-year-old daughter got him hooked on it. It’s a stock
market game created by the MarketSmith team, where investors can buy or
sell historical charts based on price and volume action. Mike says, “You get
immediate feedback whether a stock you bought or sold was the right deci-
sion, and this can really speed up your learning curve.”
(Investors can practice their skills for free at Chartarcade.com.)
Mike’s overall advice is, “Read How to Make Money in Stocks, and stick
to the CAN SLIM Investing System. Put in a few hours of study each week,
and you will be able to have that extra spending money or a larger amount
of money to retire on. But if you want to truly change your life, it’s like
everything else: it takes a lot of time and hard work, but it pays off.”

• KEY POINTS •

1. Always have an up-to-date watch list.
• Create a ready list with stocks that are nearing a buy
point.

• Keep a universe list for stocks that are worth following
but are not quite near a buy point.

• After you purchase a stock, have a sell, hold, and add
plan for each stock.

• Plan your trade, and trade your plan.
2. Watch for a sign of strength.
• If the indexes are living above the 21-day moving average,
the market is strong.