Profits Through Stock Picking
O’Neill states that about 2% of shares meet the CANSLIM criteria at any point in time. He advocates use of charts in addition to the CANSLIM criteria to understand a stock’s price movements. This allows the trader to determine when the stock is forming a new high. This means that the trader should never anticipate a price increase, but wait for the breakout.
Risk control
When prices go down, you need to cut your losses quickly. O’Neill never holds a share once there is a 7% loss. In bear markets, you can lose a significant percentage of your holdings by continuing to keep shares while the price continues to fall.
He does not advocate over diversification, but being very selective, and thoroughly understanding and monitoring the stocks that you hold.
Conclusion
William O’Neill has produced outstanding results by carefully identifying the characteristics displayed by winning stocks prior to their price advances. This is a combination of technical and fundamental criteria. With web based filtering tools, you can quickly narrow down a list of stocks that meet the criteria, and then evaluate other characteristics such as whether the company has something new to offer, and whether it is breaking out of a price base before making the trade.
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Tags: CANSLIM, stock picking, stock profits, William J O'Neill