How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition

“There certainly is. I never buy at the bottom, and I always sell too soon.”

Be careful of selling on bad news or rumors; they may be of temporary influence. Rumors are sometimes started to scare individual investors—the little fish—out of their holdings.

1. If you cut all your losses at 7% or 8%, take a few profits when you’re up 20%, 25%, or 30%. Compounding three gains like this could give you an overall gain of 100% or more. However, don’t sell and take a 25% or 30% gain in any market leader with institutional support that’s run up 20% in only one, two, or three weeks from the pivot buy point on a

A “double-bottom” price pattern looks like the letter “W.” This pattern also doesn’t occur quite as often as the cup with handle, but it still occurs frequently. It is usually important that the second bottom of the W match the price level (low) of the first bottom or, as in almost all cases, clearly undercut it by one or two points, thereby creati

Heaviest daily volume. The ultimate top might occur on the heaviest volume day since the beginning of the advance.

Exhaustion gap. If a stock that’s been advancing rapidly is greatly extended from its original base many months ago (usually at least 18 weeks out of a first- or second-stage base and 12 weeks or more if it’s out of a later-stage base) and then opens on a gap up in price from the previous day’s close, the advance is near its peak. For

I learned that your objective in the market was not to be right, but to make big money when you were right.

At the same time, sell and eliminate stocks that start to show losses before they become big losses.

Largest daily price run-up. If a stock’s price is extended—that is, if it’s had a significant run-up for many months from its buy point off a sound and proper base—and it closes for the day with a larger price increase than on any previous up day since the beginning of the whole move up, watch out! This usually occurs very close to a stock’s peak.