Lessons from legendary traders: “investor’s business daily man” william o’neil

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“The whole secret to winning and losing in the stock market is to lose the least amount possible when you’re not right.” – William O’Neil

• William O’Neil was born on March 25th, 1933 in Oklahoma City.
• He studied business at the Southern Methodist University.
• After receiving his Bachelor’s degree, he enlisted in the United States Air Force.
• In 1958, he started his career as a stockbroker at Hayden, Stone & Company.
• O’Neil invented the CAN SLIM strategy and became the top-performing broker in his firm.
• At the age of 30, he bought a seat on the NYSE (the youngest at that time ever to do so).
• In 1963, he founded William O’Neil + Co. Inc., a company which developed the first computerized daily securities database.
• In 1972, Daily Graphs was created by William O’Neil as a printed book of stock charts delivered weekly to subscribers.
• In 1984, O’Neil made his research available in a print form with the launch of Investor’s Daily.
• 10 years after founding Investor’s Daily, it had a paid circulation of 149,557.
• In 2010, MarketSmith, an online stock research tool, was launched as the next generation of Daily Graphs Online.

William O’Neal was a mentor of Mike Lowrey and Rodney Fragodt, who successfully started a new research company “Market Trends Research Corporation”, which utilizes the O’Neil type approach that caters to the needs of the investment professionals.

William O’Neal 10 Commandments (source: “Trade Like an O’Neil Disciple: How We Made 18,000% in the Stock Market”):

1. Never Get Carried Away With Yourself. “The basic idea is that one should remain impervious to the illusions and trappings of wealth, as they often lead one to become carried away to the point where excess of one sort or another ultimately leads to one’s demise.”
2. Never Operate From a Position of Fear. “If you are fearful in the markets, either as a result of taking a recent loss or some other mistake, or even as a result of being nervous about the level of risk you are taking, then you are putting yourself in the position of making and unclear and hence incorrect decision.”
3. You Learn More From Your Enemies Than You Do From Your Friends. Make sure you take the criticism’s of others and use them to your advantage by recognizing that the more others criticize the more you value your own beliefs, trading or otherwise.
4. Never Stop Learning and Improving. Always focus your mistakes and searching for ways to correct them. That way you will not be as tempted to make the same mistake again.
5. Never Talk About Your Stocks. This is purely an ego taming exercise. While I personally believe it is ok to discuss technical analysis and stocks that may be on a watchlist there is really no benefit in bragging about success and hiding your failures. It is ok to be wrong.
6. Don’t Get Giddy at the Top. Bigger charts (such as the WEEKLY) are the best barameters for giddiness. By watching over extended big charts, the trader’s emotions can be better managed thereby avoiding jumping on the caboose as the train is set to take a break from its recent trip.
7. Use Weekly Charts First, Daily Second, and Ignore Intra-day Charts. No need to focus on the noise at the expense of listening to the still, small voice of Mr. Market.
8. Find The Big Stock. Look for stocks under accumulation and then begin buying in preparation for distribution.
9. Be Careful Who You Get Into Bed With. Although not a trading rule per se, keeping good, solid company outside the charts, can help you be the best trader inside the charts. “Trust and integrity between two people are the most important variables in life and in business.”
10. Always Maintain Insane Focus. Focus “is what makes life worth living, and by relentlessly pursuing our passions we attain the state of insane focus that in turn drives high levels of success.”