SEPA method of Mark Minervini

Mark Minervini is a successful stock trader and the author of the book "Trade Like a Stock Market Wizard." In his book, he outlines eight specific points that he refers to as the "SEPA® Method" (Stocks, Entry, Position size, and Avoiding the crowd) to achieve superperformance in the stock market. These points are designed to help traders identify high-probability setups and manage risk effectively. Here are the eight points:

1. **S**: Select Leading Stocks: Focus on identifying stocks with a history of strong price performance and earnings growth. Look for stocks that outperform the market and their peers.

2. **E**: Entry: Wait for a high-probability entry point. Minervini emphasizes buying stocks when they show technical strength, like breaking out of a well-defined base pattern on significant volume.

3. **P**: Position Sizing: Determine the appropriate position size based on your risk tolerance and the stock's volatility. Minervini advocates risking a small percentage of your capital on each trade to limit potential losses.

4. **A**: Add to Winners: If a stock proves to be a winner, Minervini suggests adding to the position as it continues to show strength. This pyramid approach can help maximize profits in a winning trade.

5. **E**: Early in the Move: Try to enter a stock early in its uptrend, so you can capture the bulk of its price move. This means being alert to the early signs of a stock's breakout or uptrend.

6. **R**: Review Your Stocks Regularly: Constantly review the price action and fundamentals of the stocks in your portfolio. Be prepared to exit if a stock's performance weakens or its fundamentals deteriorate.

7. **F**: Focus on Losses: Minimize losses by adhering to strict stop-loss rules. Be willing to cut your losses short if a trade does not go as expected.

8. **O**: Overcome Common Investor Errors: Avoid common psychological biases and emotional pitfalls that can lead to poor decision-making. Develop a disciplined approach to trading.