What Strategies Does 'How To Make Money In Stocks' Recommend?

'How to Make Money in Stocks' lays out a systematic approach, blending technical and psychological insights. The core strategy revolves around the CAN SLIM method—a seven-pronged framework focusing on Current earnings (strong quarterly growth), Annual earnings (consistent yearly increases), New products or management, Supply and demand (low float + high volume), Leader or laggard (industry-leading stocks), Institutional sponsorship (backing by big investors), and Market direction (aligning with trends). The book emphasizes cutting losses at 7-8% to protect capital, a discipline often overlooked by emotional traders.

Beyond the basics, it delves into chart patterns like cup-with-handle or flat-base breakouts, stressing the importance of buying at precise pivot points. The author also advocates studying past market cycles, highlighting how leading stocks often share traits like explosive earnings growth before major runs. Psychological resilience is key; the book warns against averaging down or chasing tips, urging traders to rely on data over gut feelings. It’s a mix of rigorous screening and mental discipline.

This book is all about momentum investing with a twist—hunting for stocks primed to skyrocket. The CAN SLIM method is its backbone, but the real gem is its focus on timing. You’re taught to buy stocks breaking out of consolidations on heavy volume, a sign institutions are piling in. The author drills into reading charts like a pro, spotting bases and pivot points where breakouts happen.

Another standout tactic is avoiding cheap stocks; high-priced winners often climb further. The book also stresses selling rules: take profits at 20-25% gains unless the market’s roaring, and never let a winner turn into a loser. It’s not just about picking stocks but mastering when to enter and exit. The emphasis on market phases—bull vs. bear—helps tailor strategies to conditions, making it adaptable.

The strategies here blend growth investing with technical triggers. CAN SLIM is the star, but the book goes deeper. It teaches you to fish for stocks with institutional demand—look for those with rising ownership by mutual funds. Volume analysis is huge; breakouts must come with volume spikes to confirm legitimacy. The author hates guesswork, so he pushes for written rules like ‘sell if a stock drops 8% below your buy point.’

One underrated tip: track the market’s health daily. If leading stocks start stalling or distribution days pile up, it’s time to raise cash. The book also warns against diversification early on—focus on a few high-potential names instead. It’s a playbook for aggressive growth, but with strict risk controls.

CAN SLIM’s the heart of it: buy stocks with strong earnings, new catalysts, and institutional interest. The book’s ruthless about cutting losses fast—no hoping, just exit. It loves breakouts but insists on volume confirmation. Another tip? Watch for follow-through days after market corrections to spot new uptrends. The strategies are simple but demand discipline; no room for emotional trading. It’s a system, not a gamble.