Welcome to the Beginners in Stock Trading Newsletter! Over the next several months, you’ll receive expert insights, proven strategies, and real-world examples from some of the greatest stock traders in history.
Every newsletter has 2 sections. The 1st section is devoted to learning. Each building on the previous day’s lesson in logical order. Giving you a full, free trading education in under ten minutes a day.
Missed a day? You can find all of the previous newsletters online to catch up or if you joined later.
The 2nd half of the newsletter is a briefing on 1-3 stocks in the news. Read it. Then click on the links to see the corresponding charts inside the original articles. This will accelerate your ability to read the charts.
Learning to how to trade will change your life.
Daily Lesson(each builds onto the next)
📝 Today You’ll Learn
Why “small losses” are a trader’s tuition and how a –7 % to –8 % hard stop became the cornerstone of CAN SLIM.
Livermore’s iron-clad sell commands (the man blew up twice—then vowed never again).
Minervini’s volatility stop—how he tailors the exit line to each stock’s personality.
A step-by-step position-sizing worksheet so no single trade can sink your ship.
Real-world walk-throughs: NVIDIA ’17, Bitcoin ’21–’22, and Apple ’24.
A print-and-pin checklist for Monday morning.
1️⃣ Why Cutting Losses Early Beats Every Other “Edge”
“The professionals win by not losing big.” — William O’ Neill
O’Neill’s research into every 20th-century super-winner showed a brutal truth: three out of four stocks follow the general market. If you’re wrong on the market—or the stock—hanging on “just to see” can decimate a portfolio:
Loss Taken | Required Gain to Get Back to Even |
|---|---|
–8 % | +8.7 % |
–20 % | +25 % |
–33 % | +50 % |
–50 % | +100 % |
O’Neill settled on –7 % to –8 % because it’s:
Tight enough to prevent portfolio-killing draw-downs.
Loose enough to survive normal shakeouts of sound chart patterns.
2️⃣ Livermore’s Non-Negotiables
In Reminiscences of a Stock Operator, Jesse Livermore recounted blowing up in the 1907 panic. His take-away:
Never average down. Buying more because price is lower only compounds error.
Never widen a stop. If $50 was your uncle point yesterday, it must be your uncle point today.
Cut quickly, forget instantly. Losing trades are expenses, not moral failures.
Livermore usually set stops just below the last obvious pivot—a swing low or consolidation shelf—so that if the market proved him wrong, he was gone.
3️⃣ Minervini’s Volatility Stop—A Flexible Upgrade
Mark Minervini keeps the spirit of O’Neill’s 8 % rule but adapts it to each stock’s daily range:
Measure the ATR (Average True Range) of the last 10 days.
Multiply by 1.33–1.50 (he calls this VStop).
Place the stop that distance beneath your entry or beneath the low of today’s breakout.
Example: A biotech trading at $40 with a 10-day ATR of $1.20.
VStop = 1.5 × 1.20 = $1.80.
Initial stop = $40 – $1.80 = $38.20 (–4.5 %).
On quiet leaders (e.g., consumer staples) VStop can be tighter than 8 %; on hyper-volatile names (crypto miners, small caps) it may exceed 10 %. The principle stays: decide before you enter.
4️⃣ Sizing So the Stop Hurts—But Never Kills
Use the 2 % Capital-at-Risk rule popularized by “Turtle” champion David Ryan:
Decide what % of account you’ll risk per trade (beginners: 0.5 %–1 %).
Divide that risk dollars by the dollar distance from entry to stop.
Result = shares to buy.
You have a $20 000 account, risk 1 % = $200.
Stop is –$2 per share.
Position = $200 ⁄ 2 = 100 shares (max).
5️⃣ Real-World Case Studies
Ticker & Setup | Entry ➜ Stop | Max Pain Taken | Outcome | Lesson |
|---|---|---|---|---|
NVIDIA (NVDA) – Jan 2017 breakout from 9-week flat base | $108 ➜ $100 (–7.4 %) | Stop never hit; sold half +25 % eight weeks later | Stock 5× by ’21 | Right-size the stop and ride the core. |
Bitcoin – Nov 2021 failed breakout at ~$68 900 | $68 000 ➜ $63 500 (–6.6 %) | Stopped 3 days later | Fell 75 % to sub-$17 k | O’Neill’s rule saved > 70 % capital. |
Apple – Sep 2024 post-earnings pop | $200 ➜ VStop $190 (–5 %) | Never touched; trailed stop to $217 | Still open | Tight VStop on mega-cap works. |
6️⃣ Print-and-Pin Beginner Checklist 🖨️
□ Entry + exact stop written down before purchase.
□ Risk per trade ≤ 1 % of total capital.
□ Stop order (or mental alert) placed immediately.
□ No averaging down—ever.
□ Loss harvested? Journal the reason, move on.
Stick this next to your screen—it’s your shield against the #1 portfolio killer: ego.
7️⃣ From the Masters 📚
William O’ Neill, How to Make Money in Stocks, Ch. 10 – “When You Must Sell and Cut Every Loss … Without Exception.”
Jesse Livermore, Reminiscences of a Stock Operator – chapters on early bucket-shop lessons.
Mark Minervini, Trade Like a Stock Market Wizard, Ch. 11 – “Minervini Money Management.”
🚀 Action Steps for the Week
Audit your open positions. Any > –8 %? Decide tonight—cut or justify.
Run a fresh watch-list scan. Filter only stocks that let you place a stop ≤ 8 % beneath logical support.
Paper-trade the VStop method on two volatile names (add Bitcoin if you follow crypto). Record results next Sunday.
“Losing a little is like tapping a fire out with your shoe. Let it burn, and you call the fire department.”
— Jesse Livermore
Keep the fires small, and the winners can shine.
🔒 Financial Disclaimer
This newsletter is for educational purposes only and should not be construed as investment advice. Markets involve risk; always do your own due diligence or consult a licensed professional before acting on any idea.
See you Monday—rested, disciplined, and ready!
Train Your Eyes On This Pattern(of the month)
“Double Bottom”
📉 What Is a Double Bottom Pattern?
A double bottom is a bullish reversal pattern that signals a potential end to a downtrend and the beginning of a new uptrend.
It’s shaped like a “W” on a chart and forms when a stock tests a low price level twice, finds support each time, and then breaks out above the midpoint between the two bottoms.
✅ Key Traits of a Double Bottom:
Two Distinct Lows
The second low should occur at or slightly below the first (a shakeout is common).
The time between lows should be at least 3–4 weeks, ideally longer.
Tightness and Volume Clues
The second bottom often occurs on lighter volume, showing selling is drying up.
Watch for increased volume as the stock rises from the second low and especially on the breakout.
Buy Point (Pivot)
The buy signal is triggered when the stock breaks above the peak between the two lows—known as the pivot point.
Volume should be 40%–50% above average on the breakout.
📖 William O’Neil’s Perspective:
“The double bottom is one of the most successful base patterns when formed properly, with the second low shaking out the weak hands and the breakout occurring in sync with a strong market.”
📊 Real Example:
Let’s say a stock drops to $50, rallies to $58, then drops again to $51.
If it then surges past $58 with strong volume, that’s your buy signal—with a pivot at $58.
📊Chart Example:
Use these market tools to scan for and review stocks:
✅ MarketSmith (MarketSurge) – Premium Market Analysis and Scanner Tool
✅ Charts.com – Budget-Friendly Charting Option
✅ TradingView – Free & Subscription Stock and Crypto Charts
✅ DeepVue – MarketSurge Inspired Analysis and Scanner
👀 Seeing real-world stock patterns helps train your eye for long-term trends.
Our Sister Newsletter. Because everyone’s a Beginner in something.
News(Sunday summary)
TARIFF TORQUE PULLS INDEXES DOWN
A fresh wave of tariff talk and a pop in Treasury yields knocked the wind out of Wall Street’s sails this week. The Dow, S&P 500 and Nasdaq each shed about 2½ %, while the small-cap Russell 2000 gave up roughly 3½ %. Even with the slide, the S&P 500 managed to stay above its 200-day moving average—proof buyers still held the line under the surface.
Headlines driving the retreat: President Trump floated a 25 % levy on iPhones made overseas and hinted at tougher duties on Europe, and bond yields jumped to multi-week highs. Bulls pointed to bright spots—Nvidia, Broadcom and Taiwan Semi all flirted with buy points, Tesla found support after Elon Musk reaffirmed his CEO role, and traders began penciling in next Wednesday’s Nvidia earnings along with Friday’s core PCE inflation gauge for the next spark.
Catch the full wrap-up here
Stock Spotlight
BrightSpring Health Services (BTSG)
Home-Care Rookie Climbs The Ranks
BrightSpring, which delivers at-home nursing, infusion and pharmacy support, has jumped to the top slot in its industry just 16 months after its IPO. Shares have gained more than one-third this year and are building a cup base that tops out at $24.80.
Key Facts
Latest close (Fri May 23): about $24.50
2025 move: +36 % year to date
Earnings trend: EPS has risen 23 %-96 % in each of the last four quarters
Sales trend: revenue has advanced 13 %-29 % over the same span
Guidance: management sees 2025 sales of $12 B-$12.5 B and adjusted EBITDA of $570 M-$585 M
Ratings: IBD Composite 99; Accumulation/Distribution A
Chart setup: cup base with a $24.80 trigger; price sitting just below entry
What Traders Can Learn
Fresh issues can run. Stocks that debut with double-digit sales and earnings growth often draw funds once a clear base forms.
Accumulation signals demand. An A rating and rising relative-strength line hint at steady buying from large investors.
Demographic drivers matter. Growing need for in-home elder care and specialty infusions provides a long runway for companies able to scale service networks.
Keep an eye on volume if BTSG pushes through $24.80; heavy trade would confirm fund participation and improve the odds of a sustained advance.
Refer a friend
5 referrals How to Make Money in Stocks Complete Investing System by O’Neill
10 referrals How to Make Money in Stocks Success Stories by O’Neill
15 referrals How to Make Money in Stocks, Getting Started by Matthew Galgani
30 referrals Trade Like a Stock Market Wizard by Mark Minervini
50 referrals Lifetime access to the upcoming video courses and 50% off live events and digital products
How to Make Money in Stocks Set
Thank you for reading. We’re all Beginners in something!
-Beginners in Stock Trading Team
This newsletter is for educational and informational purposes only. The content herein should not be considered financial advice, investment advice, trading advice, or a recommendation to buy or sell any securities or financial instruments.The strategies, opinions, and examples shared reflect the personal views and historical references from publicly available sources, including the works of William J. O’Neil, Jesse Livermore, Mark Minervini, and other professional traders.Trading in the stock market involves risk, including the risk of losing capital. Past performance is not indicative of future results. You should conduct your own due diligence and consult with a licensed financial advisor or registered investment professional before making any investment decisions.
We do not guarantee any specific outcome or profit. You are solely responsible for your own financial decisions and trading actions.