Focus on buying leading stocks in leading industries
Look for companies with strong current quarterly earnings growth
Look for strong annual earnings growth over the last several years
Prefer stocks with new products, services, management, or price highs
Buy stocks when they break out of sound base patterns
Use charts to identify price and volume trends
Favor stocks with heavy trading volume on up days
Avoid buying weak stocks just because they are cheap
Cut losses quickly if a stock falls 7% to 8% below your purchase price
Concentrate on a few high-quality opportunities
Pay attention to general market direction before buying
Use the CAN SLIM approach
C: Current quarterly earnings
A: Annual earnings increases
N: New products, new management, new highs
S: Supply and demand
L: Leader or laggard
I: Institutional sponsorship
M: Market direction
Buy stocks near proper buy points, not after they are extended
Sell into strength when a stock becomes overly extended
Avoid averaging down on losing positions
Hold winners as long as they continue to act well
Learn to read price and volume charts
Study historical market winners for recurring patterns
Be disciplined and patient
Protect capital first
Focus on market leadership and relative strength
Avoid low-quality, speculative stocks
Use market indexes to confirm trend changes
Watch for accumulation by institutions
Sell when a stock shows major weakness or breaks key support
Keep emotions out of investing
Follow a rules-based approach consistently