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    The Lifecycle Trade (@TradersVideo - Library)

    Uploaded by

    Praveen Kumar

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    © All Rights Reserved
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    TT eee ee eR ce ee een ian eEM Teen er eee arc mune enn ty Sao Orem eee eon tee Cee tS) ee ee URS er ns ee ee eee ee eee ree a Cn eee ee eee ee eT Cee cet Chet eee ee ee Se er eae a eer eS Per eeenetnetis Ree ee ee et Soler Area ee cme merce eT et Sra ieter eee eee Caer eee etna Ce ee ee eT i teereeacan seen ee eT ee n ain x hy yas of managing ESO on Se oh reel ee en Teer aan rene eerenen tent See er ot Teeth eae {OW TO WIN T TRADING meemalb ee 1d 1.3 GROWTH STOCKS ‘Copyighe ©2018, 2019 by Blazes Gea, Ine Allright seed Published by Bhnea Gracie Ine TiadeSeaon ia sgiteed tear of iadSeaton Technologies, In. All sights served Allhar rene with TedeSaion [No pao his publistion nay be reproduced, sored in reveal pe, ‘rammed nay form or by any means cectvoni, mechanical photeeoyyng ‘eeording scanning or oset wie excep’ as permite under Section 107108 ‘the 19°6 Unite Stats Copight Ac, thou the ror writen permission ‘the copyright bolder. ‘his publication presented solely for edusationa and informational purposes you wh coapplp the Hes nd concep contain herein, you do 5 your ‘vn ne This pullin Intend to provide scurte and authoratve infamation wth regard othe subject ter covered at val athe te of uletion; however, he re proved without representations oe warcntis Ih respect tothe accursy or ompltens oft content andthe shor ad Pubes specially dla anp inp warner of merchanebiey Fine fora partial: ppose. This pblcagon ir sld with he undereanding thac he authors and publisher ae not rendering leg, accounting, Banca, rac profesional service, Each company ade and ransacton lee, tnd he vie and statis cosine erin mighe nr be sable to your Siti. The serves of «competent profesional should be sought where inp The thos and pblihersspeslly diam any Unb, So, terse pesonal or ocherse, cured sn onsequenee dic or idee, “ihe toe ad splkaton of ay of the coments of thie pico. In ltkligon one or ore ofthe nese cure dacosed inthis pobliadon tn hve been ena utente hel, and/or maybe el nee are Jyonc oe mote ofthe autho or cles of thelr rms nd noehing ia his Piao shold be conser 4 recommenditon to buy o ll ny sac ISIN Pie 978-73950660-1 (SIN eBook 978 1.7335066.18 Corer al inesor sg by Michel Feingold wtiertr of MDa LL. Fr moe iormation. plese vie ‘nvwihancenenkillcingoli or esl nde Contents ‘Acknowledgments Foreword Meet the Research Team Invroduetion ‘Chapter In Search ofthe Next Amazon Chapter 2: Super Growth Stocks Study Chapter 5: Super Growth Stock Lifecycle CChepter 4: Discover Lifecycle Pattorns Chanter 8: Lifecycle Trading Rules (Chapter 6: Leveraging the Data for Success ‘Chapter 7: Stack Selection and Trade Management ‘Chapter 8: Money Management Chepter 9: The Lifecycle Advantage (Chapter 10: Chat With the Research Team Attorword ‘Appendix: Key Terms Appendix Ii Resources for Trading Index 101 8 18 17 18 Acknowledgments he authors woud like ro acknowledge several people who have shared sheiwealthoftradingespetienceoverthe years and augheus snany great essons. Much appreciation and tanks othe following, sncitos: William O'Nel, Jim Roppel, Dr. Bree Stenbarger, Dan Zanget, and Peer Brande The importace of mentors can never te overstated. We ae forever grateful for the sldess way these individuals have shared thee tne and wisdom, ‘We would like to acknowledge ou find and colleague Ajay Jan for sharing his intermediate crm sel rule with ws and granting petssion rouse the rule in aur research study. ‘A special thank you to our very talented editor, Keli Christiansen, for he ereativiy and working her magic with words ‘ohelp us bring out the best in ose manuscript ur amazing designer, Michele Feingold, i uve ast that has brought our book ci, and we thank her for setting the gold standae in nance book desig, We sincerely thank all of our reviewers, especialy John Boik, Petr Brandt, Mike Cintolo, Michelle Feingold, Ajay Jani, Jim Roppel, Jack Schwager, Dr. Brew Stcenbanges, Ryan Worch, and Dan Zanger, for their conssuetive feedback and valuable comments, which were of great help in systematically improving ‘ourial manuscript. We also want ro thank TradeStation’ Michie! Buske, Don Prat and Chris Walker for tei suppor and assistance with the TradeStation platform thar was used to produce al of the chars and geaphs. Finaly, much love ro out families fr being supportive of our endeavors over the past few yeas as we searched fora method to Alisover thenexe Amazon, Foreword {hchal dhe honorofknowingeath ofthe thors of Ie ifle Tan na ices trey Jary dsc ews onthe markt for he coming see AAD cr inighe ale ouomanding, Thiele “Spat in tayinganleing and wsearhing the syle of feoiah wocks and 1POs 6 thorough and nce wale or Fen the mow veteran eas looking fer the next monster tock “Tei Karate fine and the Bottom line his Thay have mae mone or my hedge fund pater and me Handled proper sta ewbigvnsng POs cin deamatily change your caer and your and thi book wl ep you in pa he PO a ce tt ree pportunies for exepind anne Life Tade provides Sled ener ofthe DO Heyl swell as wisdom found Tne rls for edi sk and ecg In pois The nigh tthe of cesta proing fom 4 mons PO and the fc of deondowns acelin, TheCP Holding Method {Pgureb shouldbe powed on ret ade desk wll bemper Nfl forever the must expetenced waders And, the QUA neat theendis alle “Aer hy year of maragingmone.hisbookhas opened ny eyes now Kear and made meee at thee lay oe I Teas minded neta ang ul ipl and had work hope te fey Trade wl ely sty dipined wle youd i nex Aman, — Cheer Jim Reppel Meet the Research Team ve Boboch hs ic polio mange ad Iker saegst Roppe Cpl Management ISI ire tott Por jt nbn Eccneda tlt eet fe Fel Reve foe A ‘than ewenty yeats. She carned an MBA in Finance fom Lyla Utes of hie Sheed ines BS [xing om mentoring Wm OTN in Rope De Bre tenure Pc Bre Dan Zang a he dy tmmter Sh naps force ton anoc ilotenpa mthebok How ake Monin St Sen Sire Ay Sih Kathy Donnelly received a degre in Electrical Enginecting from the University of Houston. Despite a successful career in the Oil and Gas fndustey, Kathys goal has fong been to manage her ‘own money, Ie was in 2006 when she met her tear members in Naperville, Hlinois, and was able to fll her dream. and start trading actively. Today Kathy manages her own money while pursuing fitness goals, She recently became an Ironman and is current training for her second race, Her mentors include the seu team members, William O'Neil, and Dan Zanger. Erle Krull has been a falltime eader since 1999 and has managed a hedge fund in the Chicago axea since 2013, Prior to thar, he was a business ‘management consultant, financial analyst, and project enginces. He earned an MBA from the Univetsity of Chicago with = concentration in Investments. develops TradeStation programs co analyze markers, socks, and rading seratgics. Hlis mentors include William O'Neil, Jim Roppel, Dan Zanger, Mark Minervini, and the other study ‘cam members Kurt Dall is fullime commercial aidine pile and pare-imemoney manage and stockspeculaos. He served as « Top Gun Instructor and US. Naval - ‘Officer foe more chan ewenty years. In furtherance of his investing career, Kur stared reading books |y Willan O'Neil n 2003, Tn 2014, he founded the Pifoe Investors Group, LLC, which coordinates monthly training events for wvlval stock speculators. Kure remains engaged In che process 1 uiving co become an expert in he fed of money management k speculation, INTRODUCTION ANYTHING 1s POSSIBLE in the stock market, Disciplined traders understand ehis and do everything they can to be prepared for unexpected events, They know that stocks can soar sky-high one slay abd plummer the next suc is the nature of trading, They also vuwerstand thae there is no reward without tsk, no macter what thy eading Uae sud, seasoned investors also know the highs and lows of ‘ding initial public offerings (IPOs) and growth stocks, Dealing in chesesocuites can be exhilacating, challenging, and rewarding. Iie worth the risk? I certainly can be, especialy if we understand the market, iFwe are prepared forthe unexpected, and if we can Luke te los as well asthe highs. How the Journey Will Unfold Flot, we assume you ate an experenesd trade, atleast ko some ‘tent, Pethaps you have been trading suecessflly for several years nil arclookingtolearn moreabout how tadecxcitingbec volatile Jjuowth stocks, Or possibly you havea good working knowledge of | {nui and wane eo learn how we discover and pro from Fueore The oe ee en we dele ptf the sty. ll er tnd terminlogy Ht sy waa expton we bole and Flee ter an cde dition Appel big winners shor fcr chet debut as public compani, Eee wy, we assume the reader as « working knowledge of trading concep an sock chars, aswell a technical analysis experience 'Nomareryoueson#forjoiningusonhisfoune, nel sare ow we navigate teks ey in thi lifeeyle and, hopefll avoid some cot mistakes: Wehave made plenty of missteps in out quest tosaccsfilly tad growth stocks son afer they wen pbc and ve think other will eft from what we've leaned, Well sae with discussing why it imporcane vo scythe ley of growth stocks inthe st place Wel ever how IPOs evoke onetime into mature stocks, focusing on observations made luring our in-depth study. Well share with you the pater we ented that cover mont cw socks and what tle we we to boy ate sell shem. Finally, wel share with you ou ress long with ‘atios rules we've creed fom our collective expetience In other words el hare a complete methodology to handle ¢hese potentially luratv stations nag art pea and valleys, trading rules, and even the rss of out deed sy of IOs dating back othe erly 1980s which were enlightening aed bolnered os omn trading performance Indeed, we coauthors ae experienced trades with a passion for rseaech, Ou suds hae povided iluminatng infomation about the lilseycle of Super Growrh Stacks which ate stacks th have proven temsches co be exceptional investments inceasing 100 e 900 percent or more) in transformative companies with acelersting growth, With tht, el ook atthe sock pattern we lsconred thas help us deere where a stock sin ts heey \Welllock a common misakes and how co aed them. And, wel share how so identify eaeable patterns as wellas hw toca and apply satis, and some factor that can help discover the nex high-performance stock. Lets sare with a quik lok a some of shes big winners CHAPTER 1 IN SEARCH OF THE NEXT AMAZON AMAZON WENT PUBLIC a SI8 per share with a valuation of S438 rillion. Since then, the marker capitalization hss increased to an astounding $1 trillion ata recent peak. Amazon has retuened lucky ‘ay investors with an amazing ineease init stock price of mone ‘hay 90,000 percent since ies IPO in 1997 to 2018 (ee Figure L.1)2 Yes, you read that right: ninery thousand percene! Tesla delighted Jvestors who purchased shares in 2013 with a move from the $30 toy peak near $390 ia juse over four years, Netflix has a market ‘pitalization of more than $145 billion ys. $309 million athe time ‘ts PO in 2002. These awe-inspiring stocks, and others like them, have soared ince their IPOs. ‘The potential return of such life-changing nestments is alluring to say the last. What if ehere were an edge ule and proficfrom the next Amazon, Tels, ot Netix? What IV theve were a way to spor che big winners early? What select sell rules could provide an advantage? Wat if we could avoid some of the pls of erading stocks easly in dete Hifecycle? rime ate so the ne fh wing et io wach arp arora companies wth tha 81 flo (eer Ak SpaceX). When these one a he roth ake bas ocr rer tik pbc migbeaions othe magnitude of wth rues pos IPO. '90,000% Increase IPO 5-18-1997 ‘Amazon (AMZN) geee @ Monthly Chart Figure 11 Amazon Monthy Chart “We asked ourselves exactly these question and then undertook some research to find the answers. The results of char research an ‘be found inthis book, which wi eveal a methodology oidentify tradable patterns early and implement buy, hod, and sell races co prof fiom the next Amazon In these page, you will nd the prterns we discovered, which we have named ifeyele pattern. as ‘wllasocher research ndings thathavekelped ws more secesfilly trae stocks soon afer their IPOs. "Nothing worth having comes withov risk, We believe that the conclusions om our years of study demonserate how stocks behave clvingthee feel, providing atedge when trading more volale unl sometimes treacherous growth stocks Te takes discipline, psn, hard work, and determination eo put the Kndings into fwoctice AS waders the findings have helped ws to manage the ‘hks involved with tng growth stocks throughous thee various hse and eo prof fom what we've dubbed che Mferyee trade. Neat we share our personal experiences on why we wanted to siny POs Getta con Ci ec ete ee ‘©: Why did you embark upen a multiyear project to study IPOs and Super Growth Stocks: ‘A: Eve--I wanted to see if there was a way to identify stil big winner uch as Amazon, Netix, Testa Jay) pmor to its run. Over the years, had earned J rosuits in bading IPOs, often making fast vial profits and then giving back gains as the le=| wanted to do the study because | was hoping Jo find factors that were common amongst the most Hiccbssful stocks of all imme. Then, by using thesa Thetors, | would be able to identify new poten Winners and invest in them before the big move begin. I noticed that some of the best winning stocks in any given year wore stocks that recently went Publie~and | had been missing them, Or sometimes knew about a stock, but | had been afraid to invest Init because of my past mishandling of IPO stacks uring their initial volatile trading periods. | wanted to stop missing the winners and conquer the fear of trading recent IPOs, Kathy—| knew | needed to become more rigorous in my trading. in some ways, | was very lucky when I Started my tracing career: | was able to buy stocks 4nd hold them for along period of time, For the pest few years, however, the merkat has been very chopoy, | dl't really change my trading style, and | was stil trying to hold everything forever, which wes not 3 {9004 solution. | ended up lasing more money) than [should have. Since it's rare to tind 3 stock that you ean buy and hold for @ long time, it finally sunk in that | needed to adjust my sell rules it also became very ‘apparent thet any long hold is rare. A trader must Oe very selective and therafore needs strong rules for the majority of stocks, not just the minonty. Kurt—| roundt-tripped a trade in Visa shortly after it went public, After having a reasonable gain, | gave back ell the profits. I did not think much of it, other then being frustrated with net retaining any gains, | should have recognized this round-tnp os trading tuition and looked deeper for lessons learned. Years later! teded Alibaba, also shorty after it went publi ‘and had a significant gain (30 percent), Unfortunately, my Alibaba trade oecame a carbon copy of my Vise exporience. Recognizing that | had been taken to school again trading in a new market offering, | knew | needed to get involved with the study to laern how to handle these newer issues properly. eae 7 s Grow Uj Ree nee og cee ed es Le om Nee ccc cya parr speek See as ra prc er yoo end poem Se erate en aa aoe scape ee ae ae ed err a Bee ee creriiareme eae ‘We believe that the met ofoew issues, wich few: exgrin pig alps ts Ta pps ae Se cacea oct tapas ue ed “pe nk seem See mca ptr of aes mone ee NTE act ak lie Coos poet Cee aT fa pesca Sess ovdedor slew 0 eee) a power sce wing ei FO rk gla pactbinchapracs Tart yet peace Another great example of an initial base formation is Amazon Leet te cn tal etre Ss iy fas ote ‘Google (GOOGL) IPO Breakout 9-15-2004 = i i. hh tl, ° Daily Chart Figure 12 Goosie (GOOG) IPO Breskout emazon (AMZN) IPO Breakout 96-1867 Breakout . | fhe " / .| \ bafPvai! il ta dul . Daly Chart, Figure 135 Amazon (AMZN) IPO Breskout i 5 i o iM, inf Nw vod diithhiisdntad i i Figure 1.4 Facebook FE) Breakout Some 1POs dont even have an inital ally Remember Facebook jus prio toes LPO? Everyone appeared to bea fan, al the media Heavily covered the sue witha posive bias, therefore exhibiting skip contrarian warning signs True to form, it opened a $38, sul quickly eanked to S18 ina few months. Over ime, Facebook “acback nd went on to become a Super Growth Stocks howere, investors who jumped in immeditely were hart financially asthe suck inital dropped in price ee Figure 1.) Of couse, nt all stocks suffer Fors IPO disease, After looking st many charts of the bese performing tock of che past ory yes sv started to see similar price patterns occurring over and over sin Inthe chapters wo fallow, well share che patterns and explain ow the findings will help find once diseased [POs tha xm ino big winners. And we'll explain how our analysis shows why ‘hese companies should never completely fill ofthe radar, u 4 CHAPTER 2 SUPER GROWTH STOCKS STUDY Lit rr aa oox a how we cnc he yt thes he fag Hon ese 2btofatn.Teoglebjcrcofenahwatodinn iy tiv eed cpptmigsod wept et ie tovhonk oan nga sg eae vine. We ated devine th np ee surnamed Inept ec imps, wee st ds acter mings ey beeen Sosetokadcsr nhl ‘Study Methodology and Findings After finding that our original approach didn’t accomplish what we'd hoped for, we decided to focus on reviewing charts of the beseperforming stocks of alltime. I reminded ws ofa story about impanzees. ul S05 Something like chix Jone Goodall began seuying chimps in Tanzania in 1960 without any college training oF research plan. She thought the bese way to leamn about hea was to {vein the jungle wie a family of chimpanzees and to interae with ‘Hw an observe their behaviors. Her research was original and vy considered groundbreaking, The moral of the story: The bese 1) to learn about chimps iso spend alocof time watching chimps. tHarswhat we did for ou study, We had not sen any in-depth lnooks specifically aboue IPOs or about the lifecycle patterns of Jon Sa, we watched the chimps—or, in tis cas, the best stacks scat on go be elite performers. We spent alot of ime studying jus fin thebextstocks behave during theirliecycles and examining wiht the charts looked lke afer their IPOs as well as before and luring their big moves. Aer we pored over the charts, we were ig patterns, which we mapped out, ‘vines al defined ineo what we cll ifeeyee patterns. \We belived the patterns would help us learn how to handle vv aypes of price moves during these stocks’ ifcycles. As we vie more fmilise with che patterns, we realized we had creaned + oy eeading language thar would help us eride IPOs and more native Super Grows Stocks \icr we categorized the stocks, a question popped into our Ajjcsions: What eype of sell rules would make big profes? We howe «select group of high-performance stocks for testing to \cvine how sell rules performed. We also determined which Juke worked eter on certain lifeeyele pattems, and we'll share ose Hing as well Inthe second phase ofthe stad, we examined| many stocks that ‘ont ple sine che 1980s and are stil eaded today. We analyzed ‘hye socks inorder to determine how much they have gained, how quickly theyhave moved, al how large their corrections have been. Isis review confirmed thar the majority of new issues going ull, with Few excepeions, go through defined price parterns and phases, We teed chat stocks lke ving beings, stare young, and Hen, hopefully, grow up. This is pare of a stocks lifeeyle, Now slic weve shared how the study was conducted, let's die in to the Ujicyete phases of tacks to see hove it proves a framework For four methodology jp t find several re CHAPTER 3 | SUPER GROWTH STOCK LIFECYCLE APTER ANALYZING THE DATA collected for our study, we Found that it was posible to map the complete Super Growth Stock Lifeeyle. An 1PO isa stock in ts infancy, Just a baby, if you will Willie grow up tobe a successful Super Growth Stock? Will it be ‘only an average stock that chugs along for the resto its life with minimal gains? Or, worse, willie never become succesful at all, ‘only loser overtime? Understanding how a stock matures gives us ‘anew lens through which eo view ll stocks and reveals 2 new way roxrade them, As a result, we are able co categorize different stock patterns and tes sell rules. One key finding, which has changed the way we think aboutall stocks, can be summarized in this question; Where ‘seach stock in its lifecycle? Traders talk about the market lifecycle all che time, diseusing whecher i’ the ftse year of bull market or the beginning of a downtuen. This affects how we think about the marke and maybe how heavily invested a erader will become. How often do we evr really consider wherea sock isin is ifecycle? ‘Would this also affece how heavily invested we become in a stock? ‘We'l sill need to identity high probability stock patterns, bu the Dotcom line comes down to first being ale to recognize where any siven stock isin its lifecycle ‘Knowing where «stock sin is lifeeyle, especially if early 1 he game (hence the focus on IPOS), i key in decermining how + de the stock and even how to handle portfolio management. ‘uf that means recognizing the phases of a Super Groweh ih. er careful seudy, we found that new isues advance in evo hoses PO Adeance Phase (1PO-AP) and Institutional Adsance Phase (PAP) IPO Advance Phase (IPO-AP) Hiv IMO-AP is generally shorelived, This i the intial advance of J ew fie Fe may o may not create a shore IPO or initial base hil chen rally, Not all IPO-APs begin wih an TPO or inital base: inc new isues simply move up from Day 1 orwithin several days. alless of how ie starts, this advance cends to be of shorter ‘ation, generally fewer than twenty weeks. Our research shows hot ing eis phase is best handled with shore- or intermediate to extract maximum profits. I's posible for che stock. tev elle Iw his phase eo rally 20 c0 100 percenc or more. Avuickly ast goes up during cis phase, ean come down jst vs yucky and euen huge profits neo biglosses faction i noc taken, ‘Ou research shows chat, inmost eases, aking profits faster, as wich vse ter trade, avoids what likely would be a quick round-trip, 1V sempring to hol For a longer move, the resus often can prove Alspoineing. This eatly ation eypically is associated with the excitement ing a new equity eading forthe fist time, vin publiciey surzou Iv ao can be associated with general matkee action, IPOs ean, for ‘ecmple, comrcee quickly and signifcandy as the general market singer a skavnturn, IPOs are subject to analyse downgrades and nuary offerings (a posemarkee sale of shares) that cause che to retteat as wel The IPO-AP ean end with a decline of more chan 40 percent if de peak of che advance, adeline i price betow the entire IPO. Juve strenure, or even below the IPO offering price, Some IPOs ‘quickly undercut the IPO-AP, while others never go through the TPO.AP. We call both of these scenarios IPO Advance Failure (1PO-AF).Even ifastock exhibits IPO-AF, our esearch has show thacan [PO ehae gains 100 percent in a shore amount of time early in ts lifecycle can turn into a Super Growth Stock ater in it if, “This is where diligent monitoring is important, in case the scack. ‘urns around, Institutional Due Diligence Phase (I-DDP) ‘Knowing that a stock char has gone through an IPO-AP is worth. watching, a trader might ask “Why would I want to keep my eye ‘on a stock that never had an 1PO-AP and has only disappointed by going through IPO-AF?" Theansweris that because, at some point, both types of stocks could marure and grow up. IFthey do, we can find it on the char by looking for what we call che Institutional Due Diligence Phase (LDDP), ‘The FDDP is a separate phase to watch (aot trade) that represents a period of consolidation or base-forming process aft the completion of the IPO-AP or IPO.AF. Ou research has revealed that the FDP phase can range from several months t0 ‘80 years or more. This phase in the lifecycle eypically wears out or shakes out investors with its long sideways-to-dowin price action, “Toward the end ofthis phase, pethaps a stock's quidity begins co increase. Maybe the IPO now demonstrates strong fundamentals afer initially exhibiting weak earnings and sles, At che time ofthe IPO, pethaps the general marke was also in a downturn, creating resistance and noe allowing particular IPO or any stocks ro rise “The stock might have caughe the attention of big maual Funds 0 that che number of funds that own the stock tarts to increase ‘Astockshowinga constructive -DDP phase should be watched Deeause once the phase is compleced, i mighe form a frst mature base and breakout, confirming tha itis under accuml breakoucean be eeated as ashore to incermediate on, This rade, Many stocks during the end of the EDP phase stare tir advance and esl nara prio hight (on hele sie oft cosadaon In sd ot a eng even and« wenpry VUligon the mek chace Wel hte ferblene ame Shee ly sock il expences wrblence and ta this poe hart so lees wd ee aps inet who nal bough the sck we Bal apy tothe ek hasten nko wht ws pcan ie isbn vn ome erga ive bal Theseock ay llluckinosbastegpenern when pressings ceo he Vile oe tie sock den he andes woe eal and ah sng ising vnc, Thi the of the [DDI Howee ke in ind hae soko ein sacks th urblounenecr hw raion Institutional Advance Phase (I-AP) Alict the LDP is complet, if the stock stages a breakout from a Jing (or second) marurebaseand moves beyond thecurbulence zone, ‘Jong term hold may be in order. This phase can generate higher Jolt and eypcally i che longestcem and leas volatile stage of a \ovk's lifecycle. This is called the Insticational Advance Phase (I |). his advance, when succesfil tends o be of longer duration lide she study shows an intermediate- to long-term hold trade Jin extaces maximom proftabiley. Generally this phase occurs ‘when the new issues ofsignifcane investment quality. l'salso the major prize advance phase that a wader doesnt want to mist. Ji shis phase, longerterm sll rules are more effective. The general Jurket ako tight be in an uptrend ding this rime, which helps opel the stack upward Te llaeycle phases might take some time to gee used <0. ior ay veference, we ave summarized the lifeeyele phases in Table 31, Table 31 Lifecycle Phases TPO Advance Phase | inatlutional Dus nsttatfonal PO-A nce Phase Advance Phase «-DDP) (APY Ina vance of anPoypesly Shorvive Advance sata rmoture bac ster the nstttonal Bue Thlona sdewayeton | own consolidation | bose (monte foyers) ater tne Digence Phase (can Completon ofthe bethelongest se IPO sevonee Pass or | of thease IP advance Faure Prior to making 2 sustained advance, the majority of Super Growth Stocks go through a long LDP. Investors can become sworn out or even take the stock off cheir eadar dung this phase. ‘We know ftom our study, though, the exact opposite should be happening, Ths isa time to be vigilane in monitoring the scock fora breakout. Ths is one of che golden nuggers of the study: IF the potential Super Growth Stock finished its LDDP phase, staged aa breakout from a mature base, and cleaeed the turbulence zone, then the stock has entered alonger-run phase that is ripe for longer ‘erm sll roles. Wich cha, we'll be glad we never took that stock of | our rade “The final piece of this puzzle is eo consider the pattern chat develops during ehese lifeeyele phates. Understanding the stock ‘pattern and how i forms in conjunction with the phases creates 4 ‘one-two combination of how to find big winners easy. Lees tll about those lifeeyele patterns next. CHAPTER 4 DISCOVER LIFECYCLE PATTERNS MANY READERS ALREADY AUGHT BE FAMILIAR with stock Joins of wasious sorts, such as the Cup and Handle, Fla Base, 1g Tiangle,Patabolic Carve, Wedge Formation, Channe! on, Symmetrical Triangle, Descending Triangle, Flags and tor name a few As mentioned, as we set aut on our study, we watebed che chimps and were ble to categorize parcerns that nga growth stock’ lifecycle, A chartist might noe agree wl every pattern as we have idecified chem. Everyone perceives ‘onveting differen when looking a art. Someone might see a Cup Siu Halle chart patterns another trader sees an Inverced Head ‘yn Shoulers instead. Inthe end, we found hat ie’ important co Jiulvstand both the partera and che phase For early lifecycle stocks. jeauty Is in the Eye of the Beholder When reviewing a stock eal in its lifeeycle as a posible cade arudhate, we fest consider the type of pattern itis curently juicing, Macching the pattern and knowing the lifecycle phase Wl help Fules Ws impor choose appropriate trading strategies, ineluding sel ne to note that a lifeeyele pattern describes a io stock's behavior ata given point in time. A stock may resemble one ‘ures 41-44 ilustrate the Late Bloomer pattern, Nose how the pattern and then morph into another pattern. We are flexible and ck makes an intial move, stalls out, erades sideways, and then adapt our choice of rues othe changing paerns, ‘ally makesa fonger move. On the Late Bloomer line chart shown, In this ection, we'll share the lifecycle patterns, Afr each of In Figure 41, note the gray horizontal ine. Tiss the price point at the six patcerns, we'll show a graphic representation along with the close of the ise eading week for the new ise. This reference stocks that fic each category. Laer, we'll again refer to these chars Joint helps to interpret the line char, specifically ehe subsequent as we pur all the piees together vic acton, Vor exainple, in the ase of the Late Bloomer, the stock docs Late Bloomer Lifecycle Pattern wlhanetn price inialy (altace by the line charerisingabove A Late Bloomer bas an intial rove up from its IPO base. Just as Uh ty line). Then be stock retraces the ial move ad spends a everyone stares to believe it aleades this patera quickly sls out lov wim below the gra line (meaning the rice has undercut the and wears out investors with a lang, sideways move, ypiclly for Jin opening week price ation, followed by a regain of the gray close to a year or mor, before starting a masive rally. In essence, yeaa subsequent rlly (which states ee seare ofthe FAP) Late Bloomers are chose IPOs that initially appear to be great by ‘We have included this reference point (ie., the gray line) on all che staging an advance, Aer guick advance, though, Late Bloomers oj pattenn ne cares for easy reference since they hep ell the ‘quickly fll into IPO-AF (or IPO disease) The initial move is shy ol each pattern’ unigue peice path. ‘tadeable and part of the IPO-AP we talked about cadet. Once it I Figure 4.2, we show a block diagram that denotes all che stalls, the stock goes through the FDP before starting the CAP. Ieee phases a8 well as the potential urbulence zone «stock Palo Alto Networks is ne example of a ypeal Late Boomer sce Jul experience when reaching a previous price high. In Figure Table 4.1 for addtional examples of Lare Bloomers. 1) ve show the Late Bloomer Pattern with the lifecycle phases ee Superimposed on dhe actual stock char, Figure 44 includes several “sips of variations of Late Bloomer patterns. Many traders are Jobing forthe highee-pobabliey erades. Our research has showen tho lnk ng for the beginning of the LAP is a good place to stare Chpste, tggret— tasz005 | SHES, sa208 Nev les fer othe Palo Alto Networks stock chart (Figure eo Same sess 4) wih boeks depixingche phases we explained ea Wich «cso some TBtAy -_—— Joti, tader can tain her eye to quickly spot the phases on ahiEse—zaoz0or | 0.2008 Hien Res rzocon | WA sanioe Suolcomm ——aaagor |. Yep tn Late Bloomer ate Bloomer Pato Alto Networks (PANW) eal top uring (PO seve Phase Py We EEE | saregeemene | ontom oagca rons ‘Satara tora Frattadng week loshg pice Figure 4.1 Late Bloomer Line Chart Figure 4.3 Late Bloomer Lifecycle Pattern Late Bloomer— Palo Alto Networks (PANW) Late Bloomers = Can you spot the pattem? Figure 42 Late Bloomer Slack Diagram. Lifecycle Phases include IPO-AP, ODP, first mature base, second mature bas, AP Figure 4.4 The Art of Spotting Late Bloomers Pump and Dump Lifecycle Pattern A Pump and Dump goes publi w much fanfare, This patie shows, however, that the stock starts ta tank soon afer the [PO, undercuts its IPO price, and consolidates for several month soa ea or more belie starting its move up, Many trades get caught in the hype of «new IPO and get capped inthe pump and dump seenati. This can bea dangerous pattern for new investors Facebook (FB) is che eicome of Pump and Dump ( Figure 47) Juse about everyone believed that tis stock was going to skyrocket when ic aunched insted, it rumbled frm Day 1, Nore how the line char in Figure 45 stays below the gay line from the Inia ang week for more than a year, lusting the nial failure of the stock, Without a dou, Facebook was clear 1PO- AF I ok more than a year before Facebook came back to lif, Disciplined and paint investors who waited forthe righ time buy witnessed a 30 prcene upside gap breakout in Joly 2013, that, te oa fivefold move in fe years. Ae a lng LDP, Facebook ‘vas eady for che PAP and sme superior longer gas ikl de to user growth and postive earings. Figures 45~4.8iliserte che Pump and Dump pattern along with actual example. Table 4.2 Femous Pump and Dumps re carsoes | LetMERRE | aas-z008 a Linke cLNkD) age, saraiwoo | Baht) season Bala esz0os | Netto a io) | Fob | See Globe ers. 412-900 Fates GB0=) 152010 az Facets | = ravens nate sacar ie PO AavanceFltze er ny a arp soeh earths PO Figure 4.5 Purp and Dump Line Chart ‘Pump and Dump ~ Facebook (FB) Figure 4.6 Pump and Dump Block Diasram. Liftcyele Phases inchide:IPO-AF, -DDP, fst mature base, ‘second mature base, -AP Stair Stepper Lifecycle Pattern | Swe Steppereypically has atleast 20 percent mone up from the PO hoseand goes onto form mil bass (vihow undercutting Une yrvious bas), providing, mary opportunces to buy along ‘he Way up and making ie ear co hold through coretions, A i Stepper ean be one of the best opons for chose who prefer Jowcr wl The pate usualy allows a trader to garner ane Jrvcenigeprie move from the buy pone a enon, and hen the ‘ealesteps sway co moe gains. ‘Gime (Alphabes) fa great example of a Stair Steppe, and a \njuccsample ofa stock that did nor go through an LDDP phase. init Scppets breakout from an TPO base (or marure bas) a shown in Figuse 41, and inumediatcly sare the PAP. Note on the Jin hare in Figure 49 how the price action undercuts the gray line Sly Ivey and cen riser above it, meaning the stock undercuts fis eekly clase only fora shor time and then proceeds dicey to 40/1 AP, Figures 43-4.12ilustae the Stair Steppe pattern along, sh cal example. ‘Pump and Dump ~ Facebook (FB) Figure 4.7 Pump and Dump Lifecycle Pattern ‘Pump and Dumps — Can you spot the pattem? Table 4.3 Famous Star Steppers of _ ad 3 Sma nyt “y co srezoos | Hagercird 5-25-2008, as ae siswer | Mig arenes i someon | Bele 2099 i : WB vor pe-2002 629-202 00 6.263099 Figure 4.8 The Art of Spotting Punp and Dumps ‘Stair Stepper We Fretang mec dosing pce Figure 4.9 Stair Stepper Line Chart ‘Siair Stepper - Google (GOOGL) Figure 4.11 Stair Steoper Lifecycle Pattern ‘Stair Stepper ~ Google (GOOGL) Figure 4.10 Star Stopper Block Diagram. Lifecyele Phases include: IPO baso moves directly to LAP: skips tho I-DDP ‘Stair Steppors— Can you spot the pattern? 12 The Art of Spotting Star Steppers Ee Rocket Ship Lifecycle Pattern Rocket Sp A Rocket Ship starts a massive ise immediately —like ling off launching pad—from its IPO base, never undercuts ies [PO fd {or nial bas), and continues to sse 3 quickly thac it’s dificue establish a position eBays meteoric post-1PO base rises one of d bese examples ofa Rocker Ship, (e's also the basis fr one of these rules chat we discus later) g Bay moved out of a 21-Day IPO base on a gap move of 4 percent on October 26, 1998. The deep carrcton (of 50 percen Jn the IPO base before the breakour was unusual and likely d to the market environment (a bear market at the time). Aer th Serra | breakout, Bay proceeded to more than tiplein ten wecksyas show ln Figure 4.15. Air forming an intermediate peak in January 19 and subsequent top in March 2000 (along with the maker eB languished for four years before resuming ts advance, Figures 4.19 416 illostrate che Rocket Ship pare along with actual example Fat radrg weak sang pice | Figure 4.13 Rocket Ship Line Chart Table 4.4 Famous Rocket Ships Rocket Ship - eBay (EBAY) SSrrncatons siz206 | SES e208 any Adobe systems Home Depot Acpbes ese | Hom 9-220 [. Techncieges — t0-294999 | Bachange n6-2008, Bian oe say cere Michael Kors 5.6.00 eakyy we | KOR) eve S202 | cw) Figure 4.14 Rocket Ship Block Diagram, Mfoeyele Phases inci: PO-AP (100 to 500 percent oF more) Rocket Ship — eBay EBAY) Figure 4.15 Rocket Ship Lifecycie Pattern Rocket Ships - Can you spot the pattern? Figure 4.16 The Art of Spotting Roekel Ships One-Hit Wonder Lifecycle Pattern | IDO that explodes wich big gains, fizzle out, and undercuts the wc steucrure is a One-Blit Wonder. Ifa trader is fast, and has joa offensive sellrules ot tailing stops, be mightbe able co book. 1 considerable gains before the stock izes out. ‘hake Shack isa great example of this typeof stock. Take alook 417 showing the line chart of Shake Shack’s price action, “ Nove the upside-down, shaped move. This isthe signature of a ‘One Hit Wonder. After going public, Shake Shack moved out of a \Wek initial base and proceeded to almose double in eight weeks; Jowewer fe quickly round-ripped che entire IPO-AP and then vkimtely undercutting the entire structure. Shake Shack, ih sok ehece years off for its LDDP before staging a breakout Jhon is fese mature base, Maybe ie will ome back all che way and Joon subecome leading stocks however atthe time ofthis writing, I host to doso (although i has completed the LDDP and started WWI. eo! One-Hit Wonders on a watelise to monitor ifthe stocks ‘9 complete the EDDP and form a first mature base breakout. We “illilesestocks One-Hie Wonders Plus, or stocks that come back Wo lol again, Figures 4.17-4.20 illustrate the One-Hit Wonder Jpior along with some examples of boch One-Hit Wonders and je Hit Wonders Pls. Table 4.5 Famous One-Ht Wonders Shake Shack (SHAK) “Aloe (ABA) vasbieve Sree osscow | BN ano, Wonder Pe puree ‘sonoma Shake stack vo Gem onent w208 | GAA Geert 190-2018 ‘ender Sonor Pi Tato CTWLOD ] Bpotctomo — zaszom | Saale " a oe Wonder ius 252088 | es “ester rw) om Fave 61820 est ne en ms | Getta nao st ee a | Boe eae-200 Ho s2ez04 | Exo Lafeeyle Phases include: IPO-AP. IPO-AF, -DOP ‘One Hit Wonder ‘One-Hit Wonder ~ Shake Shack (SHAK) Ina acing IPO Adanca Phase rounatipe BO Avene I Fratadrg week dosha price latuteral ue Digonca Phase Iroaone seach news “Figure 4.17 One-Hit Wonder Line Chart Figure 4.19 One-Hlit Wonder Lifecycle Patten (One-Hit Wonders — Gan you spot the pattom? “Figure 4.20 The Art of Spotting One-Hit Wonders Disappointment Lifecycle Pattern A Disappointment represents an TPO that almost immediately starts to tank, undercuts ts IPO price, and rarely becomes a leader ot if it does, cakes many years co surpass its IPO price. Not all stocks compete the LDDP and mave co FAP. Tha nt 0 sy that Disappoinements never become leaders. Indced, as of this writing, Eesy (orginally asified asa Disappointment) has completed he EDDP, staged a macure base breakout, and isin the LAP neat all- ‘ime highs in price. Sometimes company such as itself when that happens, the stock can snap 00 of ts dowatrend and become aleadet. Hy isan example of aeare eurnaround in a Disappointment For another example, if Facebook had never executed vs iss mobile strategy, the company might have ended up as a sappointment rather than a Pump and Dump pactern Super LGnovth Stock, Ie eis sense, just as with all technical analysis, Jpuicsoscan morph overtime. That swhy is importantroeven keep Disappoiacments on a watchlise they appear to be completing 1 ODE, ‘belly’ stock is another good example of Dissppointment. Sse waan stembers though the stock had potential because stores i eonsded and customers seemed to like che reasonably priced wonivihes Pobelly, ae the ime ofthis writing, isin she LDDP. hiss why ids importan to distinguish a good company from ul stock, A good company isnot necessarily a good stock. Most ‘cally become the great leader we're always looking for. This vasa huge revelation to the team and reinforces the fact that @ ust be highly selective in stock picking, because the great singstocks a ue ine are few and far between. Refer to Figures for additional examples and charts of Disappoinements, 4.6 Famous Disappointments PO. Symbol a Symbot Po 40-204 e204 eis) 436-2018 6.282018 Poak Resorts y2y201 nszors | Pee n2v201 Disappointment ‘Disappointment - Potbelly (PBPB) Frat radrg week casing pee "Po Advance Fare Iratttons De Digone Phase Figure 4.21 Disappointment Line Chart Disappoininent ~ Potbelly (PBPB) © Figure 4.22 Disappointment Block Diagram. Lifeyele Phases Include: IPO-AF, LOOP Figure 4.24 The Art of Spotting Dlsappointinents (MO HOWTO WIN AT TRADING IPOs AND SUPER GROWTH STOCKS: ‘he pes we hav Weed anced in hs fee Figore 4.25) highlighe some of the key findings of our stu cee neha pte otalvencaeo iy webu char aig ane Sone four eam monben ‘example, read a few chars and determined that a particular st wetaate loner bile oder thought wat Seppe Sul dingpcnene and derepuncio uc obeerperted nena ethos pos au hon dock char enn eyinghre cs hat mig ‘Supet Growth Stocks, cae a ‘Amel wth lene metodo, eve how ee q CHAPTER 5. | LIFECYCLE TRADING RULES Jpiorions can Ger meri way of sound trading—even though lst lee them, Despite our bese efforts, most of us le out hs get ehe best of us from time to time, Trading volatile Hoh, lor example, might well cause some sleepless nights and “hounal trading, We can Kimi reckless trading by eying on well sel esto guide ws. (Ot womrse, every traet is different—even those of us on out “geen team So its important to pick the rules that work best Jor cul ter’ unique se, timeframe, and abiliey to wichstand “linus, Ou researc has revealed some effective buy and sll fle, which well examine next, Super Growth Stock Buy Rules Jjvowing, when to buy is one of the hardest lessons to learn. Most Wit ben borne many times, especally as novice investors Je wee mised ee buy poi and bought extended (3 010 sun ormexeaboe the prope breakout buy poi) only take a jean ae This ean fad to painfl loses becanse,as00n Mustek cuca n pie tit cane nach large han ithe it eared «consoldation, ey z| =@ =o Eo l J — Ray Figure 4.25 Lifocycio Pattorns So, whae is a proper buy point? In this seudy, we defined buy points used in order co have a level playing field for all thy results. For the study, our approach focused on buy points out o ‘consolidations or bass. There is an art to reading a stock chart a wwe found that the buy point can differ even using this buy pola approach. However, the variations were somewhat minimal, and the end of the day, we hand-selected and agreed to fout buy point where che seock broke into anew high after: 1. 1PO base:a shore consolidation within seven weeks of IPO stare date; o 2. Consolidation or intial base: a base greater than sexe ‘weeks from IPO stare date (prior © LDDP); oF 3.Breakaway gap: a significantly higher opening ary closing price (often 25 percent or more) from the prio day's lose on increased volume from at IPO base, iit base, or fist mature base; oF 4, First marore base base that forms afer the LDDP, the the p Although buy points ean be spevife ta tradng syle, thea buy poines we used in the study are eypical for growth stock ten traders. While some traders like to buy lows, we are growth stoc trend investors (primarily long positions), and we never ryt catch a falling knife (.e, buy a sock eat is in a downtrend) on the hop that it has botcomed, We like to buy breakouts (.., when a stoc ‘leas resistance) and sll higher. That always the gol Lifecycle Sell Rules Sell rules at ofien speci to cach trader’ timefame and trading soye. Everyone has a diferent trading syle, and each one of son the team has a different tading style aswell. Inthe Hifeyee sell rules we describe below, we each have ou own vores For one reason or anothe. This hep the question: Which sl rules are ‘most pris? ‘Our teams goal was to identify the best sell rules for Super th Stocks based on profits, drawdowns, and time-in-matkes, Wish that, we had to think aboue whae rules we alseady knew, Sl eules we actually use, and, ultimately, which rules would be foe ype Ciroweh Stocks. We determined that we would use these rules ‘ov onh pattern we identified to see how chey performed within ‘ach phase and pattern in a stock’slfeeyele for IPOs and Ivuesork by simlating each cade with an initial $100,000 “jvotncnt, Regalless of the sll ule, wehad a 10 percent stop-foss syle or alltcades, We used TradeStation progiammingco aucomate cong process, While we tested many rules, listed below are line bestpenforming rules: Ascender, Midterm, 40-Week, and wot Following the specifics of each sell rule, we answered estions |, How was the ule developed? What problem does the rule tay to solve? 2, What lfeeyele phase and patter is best for this rule? ‘cla practice, what are he strengths and weaknesses ofthis sell ule? 4, Whae was the performance ofthis rule for our selected pet Growth Stocks in terms of median percent gain unl drawdown in dollars from the peak price during the holding period based on he simulated $100,000 ls leah by Fe Books Ack Ree auboned by Kathy vy veya Kear! by Te Kral The Miter Rae asl 00 Iba soqencat sca dese by Forder aod CID Single it ‘Asconder Rule “The Aicender Ras desig vo capture agi powetl mane ina ok hat has ese gone pblc and showing eens poste momencem. In oh words te ues ep the Ij of profi daring he POA? Usingehis ele apron the poston hel in ie heck cntintes wo avant et tobe (AP We conte his an ofnsne sllelewhh dates component. The ca forthe aleaeeasfallows + Sl 1/on daly coe at 3 pent low 2-Day EMAL" + Sell 1/4 on dlc a3 pereneblow 50D SMA. as 1/4 onl finders purchase pi or ae 18 sey oar 50 eit Sealy reaks show thatthe Ascender Rae pers wel during bth the IPOLAP and FAR, aa parsacy wll stock xing sper sng nthe Roker Ship and Sait Soper paren The segs ofthe Ascender ale include locking in some groin aig winner ety and sng pel fo mech loge Profi on portion of the poson the ls Rel longer Lona Aroowne alo make this rl anracve compared osome ofthe oe sl alte The weknens ofthe conde Rel cade the pony of ling portion vo cay o gvng back prof te aporon othe potton ‘The AvenderRale haa median gun of $1 perene along wth smd $5700 drawdown The Acender Rak perro parila wllon Bays advance, hich edn Ocebet 1998, {oom sere IPO Wakes erie pel the Floingmaving aves se we fr eing ll teste od: 2-Day Espen Mowing re (2 Dy IMA nl 0D oak 40 cS Ming Ag Midterm Rule Uh Mideerm Reis dsigoed ro aid selling a big winner too nly and attempts to hold for an LAP. This rle typically would | applied after the LDP tthe star ofthe FAP, kell after che ‘ibulnce zone, We consider eis defensive sell ul. The citer eae as fallow: Afr evo closes under the 10-Week SMA, sll ar 6 percent (ntada) below the low of those wo weeks (Gnermediatterm rigge)sor + el on ist weekly lose below 10.Week SMA after Year hold (ongeem cig): ot + sl ifthe sock closes the week 30 percent offits peaks or + ull the weekly clos is below che 40-Week SMA, Stony ssults show hat the Micerm Rule performs better «the FAP as compared tothe IPO-AP due to he fact che {AP isgenerlly ess vole phase. In oursample resting, the rule js worked particularly elle Pumpand Dump and Sar Stepper ! Ihe main strengch of the Midterm Role is the potential for ‘wes lager profits on a big winner since the postion typically Jy wid thtough normal corrections. The main weakness of the DMaicsn Rae isthe large drawdown when the rule riggers a sel sual compared eo most of che other rues. the Miderm Role had a median gain of 70 percent along. With a median $66,000 drawdowen. The Mideetm Rule performed ly well on Facebook's advance, which started with a july 2013 afer the FDP was completed. pic Incakaway gap 40-Week Rule “The 40-Week Rule sesigned to hold bigwinnes fos amount of time (over a year of more) during the LAP in onder to achieve large gains. We consider this a defensive sell rule. The citerion for dhe rues follows + Sell on ise weekly (Pray) close greater than I percent below 40-Week SMA. Seudy results show thar the 40:Week Role peeforms well when attempting to hold a big winner afer the FDP and during che IFAD. In out testing sample, this rule works particularly well for Stair Stepper, Late Bloomer, and Pump and Dump patteras. “The main stength ofthe 40-Week Ruleis the potential fr ile: «hanging profs when applied tothe righ stock, such 3s Amazon, thar trends above the 40-Week SMA. The main weakness ofthe 40: ‘Week Rule isthe very large drawuiown as compared toll the other rules we reste. 40:Week Rule had a median gain of 81 percene along with 4 median $102,000 drawdown, ‘The 40-Week Rule performed parccalaly well on Amazon’ amazing move ftom its inital base in 1997. Everest Rule “The Everest Rule is designed to atempe to minimize drawdown while selling into strength and being able o sell parccipace in portion of the massive moves of big winners. This rule is best used reat the end of the FAP phase and dusing the IPO-AP. This is sell rule with an offensive trigger poine and a fas, defensive talin stop, The eiterion forthe rule ia follows: + Sell when astock makes .panaboliemove and closes hel the intraday low from two days earlier. Ifthe stock gapp ‘up the previous day, wait fora close below ee low of ty gap day 28a sll poinc, Ths rule resets asthe stock mab new highs “The Everest Reis designed to work for both che IPO-AP and 1ADsand sady results confirmed the eicacy ofthis In our testing spe this ule works parculaly well forscme One-Hit Wonders vc Rocker Ships. The main stength ofthe Evers Rle is the low deawdown as compare to all he other rules we teed, The main weakness of tHe Exeter Role sllingtoo eaty. On rare ocasions when a stock snakes parabolic move up over several day, even the Everest Rule on compl yu to sel at, causing huge drawdowns off the peak, The Everest Rule had « median 52 percent gain along with 1 median $33,000 drawdown, ‘The Everst Rule performed Jpuiclaly well a a sel rule for Shake Shack’ advance as well sec a Akhough we used high performance stocks in ou study, we Aol hae these lee sell rules, alongwith a stops ule a, ‘stoned eal can hepliitlosesif he stock peeformspootl. Tivisunderpeeformance could be dic to stock specif asus or Ince the general masker cou be de for a corsection, dragging Jinn socks down witht. ‘heady team seu spose at no more chan 1 percen of Spal pec erade(samaximum).Ava trader gains more experience, Ws posse to significantly rghten soplow pone. We used a soy loss of 10 perent (om the buy ping) ia on study du to lv volatiiy fea lfeyee socks (ager than what we use For Jone stocks) Evens, wear repre to poly be sopped-ont sera dines before getting positioned a the eighe time. Ifa trader Aisconctsa Super Growel Soc eal in is ifeyce, ches sel rules, So frais in holding fr lng profs theough ce ineiable Nihongh wehave shar a preview ofsome of the perfrmance Jul of each of the rls above, inthe nex section, we provide ‘iv dete pefoemance number of he sll ules and the actual esultsthae wouk! have Been incued had they been we on our Sell Rules Performance Choosing an appropriate rule fora specific wade should focus on parametes such as ifeeyle phase and pattern, abilcy co withstand prc dawlowns, and cradiag pesonality. As noted in the definitions of each rule, we highlighted which worked bes based on our stl resales. AS we lsh in the icone examples later in this chats, during the advance, there are periods of huge

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