The Four Stages of Stock Price Maturation (p. 66)
Stage 1) Neglect phase: consolidation —can last for months or even years
Stage 2) Advancing phase: accumulation
Stage 3) Topping phase: distribution
Stage 4) Declining phase: capitulation

“So prepare, prepare, prepare, because when opportunity knocks, which it definitely will, you want to be there to answer the door.” (p. 6)

“For me, the greatest success came when I finally decided to forget about the money and concentrate on being the best trader I could be. Then the money followed.” (p. 7)

“Remember, if you choose not to take risks, to play it safe, you will never know what it feels like to accomplish your dreams. Go boldly after what you want and expect some setbacks, some disappointments, and some rotten days. Embrace them all as a valuable part of the process and learn to say, “Thank you, teacher.” Be happy, feel appreciative, and celebrate when you win. Don’t look back with regrets at failures. The past cannot be changed, only learned from. Most important, net let rotten days make you give up.” (p. 26)

“When you buy a stock solely because it's cheap, it's difficult to sell if it moves against you because then it's even cheaper, which is the reason you bought it in the first place. The cheaper it gets, the more attractive it becomes based on the 'it's cheap' rationale. This is the type of thinking that gets investors in big trouble. Most investors look for bargains instead of looking for leaders, and more often than not they get what they pay for.” (p. 43)

“Broken leader syndrome: Investors who refused to buy a dynamic new leader when it was emerging - before it skyrocketed - become interested after that stock has topped and broken down in price. With all their rationalizing, they ignore the supreme fundamental: the market's judgment. When a leader tops, more often than not the stock price is discounting a future slowdown in growth, which makes it no bargain at all.” (p. 57)

“My goal is not to buy at the lowest or cheapest price but at the ‘right’ price, just as the stock is ready to move significantly higher. Trying to pick a bottom is unnecessary and a waste of time … you want to focus on stocks that are already moving in the direction of your trade. To accomplish this, you should wait for a stage 2 uptrend to develop before you invest.” (p. 68)

“I owe much of my success to the precision of my timing, which would be virtually impossible without the use of charts … I would never bet on my fundamental ideas alone without confirmation from the actual price action of the underlying stock. First, I utilize charts to establish the prevailing trend of a stock’s price … then I use charts to time the entry of my trades.” (p. 190)

Volatility Contraction Pattern (VCP): a common characteristic of virtually all constructive price structures (those under accumulation) — is a contraction of volatility accompanied by specific areas in the base structure where volume contracts significantly. (p. 198)

“As a trader using a stop loss, you are a weak holder. The key is to be the last weak holder; you want the other weak holders to exit the stock before you buy.” (p. 206)

“There is one thing I can guarantee: if you can’t learn to accept small losses, sooner or later you will take big losses. It’s inevitable.” (p. 282)

“Making you feel stupid is the market’s way of pressuring you to act foolish. Don’t succumb. Remain disciplined and cut your losses. The alternative to managing risk is not managing risk, and that never turns out well.” (p. 289)

“The stock market is no place for someone who is easily discouraged by mistakes. Mistakes are lessons — opportunities to improve. These experiences are the greatest part of the learning process. Although cutting your losses won’t guarantee that you will win the stock market, it will help ensure your survival.” (p. 289)

“To have lasting success in the stock market, you must decide once and for all that it's more important to make money than to be right. Your ego must take a backseat.” (p. 290)

“Not defining and committing to a predetermined level of risk (e.g. stop loss) — cost traders and investors more money than any other mistake.” (p. 301)

'“My trading results went from mediocre to outstanding once I finally made the decision to draw a line in the sand and vowed never again to let a loss get out of control.” (p. 302)

“Sure, there are going to be many times when you sell a stock that’s down and it comes right back up. So what! Stop-loss protection is about protecting yourself from a major setback, or worse, devastation. It has nothing to do with being right all the time or getting the high or low price. Success in the stock market has nothing to do with hope or luck. Winning stock traders have rules and a well-thought-out plan. Conversely, losers lack rules, and if they have rules, they don’t stick to them for very long; they deviate. The old adage holds true: your first loss is your best loss.” (p. 303)

“If you experience an abnormal losing streak, first scale down your exposure. Don’t try to trade larger to recoup your losses fast; that can lead to much bigger losses. Instead, cut down your position sizes … When your trading plan is working well, do the opposite and pyramid back up.” (p. 304)

“When you take a large loss or get hit repeatedly, there’s a tendency to get angry and try to get it back quickly by trading larger. This is a major mistake many traders make and is the complete opposite of what should be done. Don’t do it; trade smaller, not bigger. If you keep trading the same size over and over, even making small mistakes can lead to a death by a thousand cuts. Instead, scale back your trading size and raise the cash position in your portfolio.” (p. 304)

“There is no shame in losing money on a stock trade, but to hold on to a loss and let it get bigger and bigger or, even worse, to buy more is amateurish and self destructive … Remember that only losers average losers.” (p. 305)

“If you want to paint like Leonardo da Vinci, first you need to learn to think like him. Because where the mind goes, everything else will eventually follow.” (p. 8)

“My edge is maintained by keeping my losses at a fraction of my gains. The smaller I keep my losses in relation to my gains, the more batting average risk I can tolerate, which means the more times I can be wrong and still make money.” (p. 57)

“I know from experience that ‘calling an audible’ and making on-the-spot snap decisions can get me into a lot of trouble, simply because I haven’t done the full research. So, I don’t do it!” (p. 107)

discipline and consistency — the variables that always distinguish the great performer from the mediocre one (p. 113)
”If you want consistent success, you must apply discipline consistently. You can’t have one without the other. (p. 114)

“Based on studies of the biggest winning stocks going all the way back to late 1800s, more than 95% of those stocks made their huge price gains while in a Stage 2 uptrend.” (p. 117)

“Let the strength of the market, not your personal opinion, tell you where to put your money. The stocks that emerge first and with the greatest power in the early stage of a new bull market, or at the tail end of a correction, are generally the best candidates for superperformance.” (p. 152)

“Most big winners are companies that just went public within 8 or 10 years.” (p. 152)

“The absolute value of the P/E is not that important; the comparison is what matters most. What would concern me is the stock price running ahead of the earnings to the point that the P/E expanded to two or more times what it was at the beginning of a major move — particularly if the stock is also in a late-stage base as determined by a proper base count.” (p. 184)

Breakeven or better rule: when the 50-day moving average moves up and catches up to your breakeven price, the 50-day moving average is now your stop. (p. 196)

“I never buy a falling stock. I always trade directionally. This applies to all time frames, from long-term investing to swing trading and even day trading. Allowing the market to guide you puts you in sync with it, which increases your chance of making a profit and limiting losses.” (p. 214)