Elaborative Summary of “Think & Trade Like a Champion” by Mark Minervini
Overview:
“Think & Trade Like a Champion“ is a follow-up to Mark Minervini’s first book, “Trade Like a Stock Market Wizard“. In this second volume, Minervini goes deeper into the mental frameworks, routines, and specific strategies that make elite traders successful. The book focuses less on basic chart patterns and more on execution, mindset, risk management, and trading psychology — the key factors that separate amateurs from champions.
1. The Mindset of a Champion Trader
Minervini stresses that mindset is the foundation of success in trading. You can have the best strategy in the world, but without discipline, patience, and emotional control, you’ll fail.
Key Mindset Principles:
- Confidence, not arrogance: Confidence comes from preparation, testing, and consistent execution — not from gut feelings or luck.
- Discipline > intelligence: Many brilliant minds lose money because they lack emotional control.
- Don’t try to be right, try to make money: Let go of ego. Being wrong is part of the game.
- Process over outcome: Focus on executing your plan, not just on winning trades.
2. Preparation and Routine
Minervini emphasizes daily and weekly routines for scanning stocks, reviewing setups, and preparing mentally.
His Daily/Weekly Routine Includes:
- Pre-market preparation: Scan for earnings reports, technical breakouts, and volume changes.
- Review of leading stocks: Keep track of leading names in strong sectors.
- Post-market review: What worked today? What didn’t? Were you disciplined?
- Mental preparation: Visualization and focus to stay emotionally even.
“Success belongs to the prepared.”
3. Entry Strategy and Risk Management
Mark introduces a refined entry system known as VCP (Volatility Contraction Pattern) — a concept introduced earlier but elaborated on here.
Volatility Contraction Pattern (VCP):
- A bullish pattern where volatility contracts in a series of pullbacks.
- Each pullback is smaller than the last, showing controlled consolidation.
- Ideal buy points occur near the breakout from the final contraction.
- Risk is tightly defined — stop-loss just below the base.
Entry Strategy:
- Buy strength: Buy on breakout from a proper base, not on dips.
- Tight risk control: Stop-losses are pre-determined, often 5–8% or less.
- Pyramid position: Start with a pilot buy and add if trade works.
4. Risk Management: Defense Wins Championships
Minervini emphasizes capital preservation as the top priority.
Key Rules:
- Never risk more than 1–2% of total capital on a trade.
- Sell losers quickly. His quote: “Be wrong, be quick, and be gone.”
- Cut off bad trades early: Don’t let a small loss turn into a large one.
- Never average down.
- Keep drawdowns minimal (ideally under 10–12%).
Minervini believes risk control is more important than picking winners.
5. Position Sizing and Trade Management
- Pilot buys: Start small (e.g., 20–30% of your full intended position).
- Add on confirmation: As the stock proves itself, add in tiers.
- Scale out of positions into strength.
- Know your maximum exposure. Avoid being too heavily concentrated in one idea or sector.
6. Trade Like a Sniper, Not a Machine Gunner
Minervini prefers selectivity — taking only the best opportunities rather than constant trading.
- Quality > Quantity.
- Wait for setups to complete: No rush trades.
- Focus on leading stocks in leading sectors.
- Trade when conditions are favorable — sit out when they’re not.
7. Understanding Market Conditions
You must adapt your strategy based on the overall market trend.
Tools and Observations:
- Follow indices (especially NASDAQ and S&P 500).
- Track the behavior of leading stocks.
- Distribution days (heavy institutional selling) are a red flag.
- Watch for failed breakouts — a sign of poor market health.
Quote: “Even the best setups won’t work in a bad market.”
8. The Psychology of Selling
Selling is often harder than buying.
Sell Techniques:
- Sell into strength (partial exits).
- Trail stops below higher lows.
- Sell when technical structure breaks.
- Use a “line in the sand.”
He’s against selling too early but supports protecting gains.
9. Journaling and Performance Review
Minervini keeps a detailed trading journal — every trade, rationale, size, entry/exit, emotion.
- Review regularly: spot patterns, both good and bad.
- Track your win rate, average loss vs. average gain.
- Journaling is your mirror — it helps improve objectivity.
10. The Champion’s Mental Game
Minervini dives into performance psychology, inspired by sports coaching and mental toughness training.
Techniques he advocates:
- Visualization: Imagine your ideal trades, your ideal reactions.
- Affirmations: Positive self-talk to reinforce confidence.
- Meditation and focus.
- Confidence = Competence + Experience.
11. The Power of Selectivity and Patience
He gives real-life examples where doing nothing was the best action.
- Great traders know when not to trade.
- He often waits weeks for the right setups.
- Avoid overtrading — it’s a tax on your capital and psychology.
12. Real-World Examples and Case Studies
The book ends with case studies of real trades, including:
- Entry points with VCP setups.
- Stop-loss placement.
- Position sizing decisions.
- Adding on strength vs. cutting on weakness.
- Emotional lessons learned in each trade.
This section reinforces the practical application of all previous chapters.
Closing Thoughts:
“Think & Trade Like a Champion” is not a book of get-rich-quick tricks — it’s a masterclass on mental toughness, precise execution, and disciplined trading. Minervini blends the mindset of a world-class athlete with the skills of a veteran trader. The book demands action: create a plan, review your trades, manage risk tightly, and never stop improving.
✅ Key Takeaways:
| Principle | Summary |
|---|---|
| Mindset | Be disciplined, confident, and focused. |
| Entry | Use VCP and breakout setups with low risk. |
| Risk Management | Never risk big; cut losses fast. |
| Trade Management | Scale in and out; keep a journal. |
| Patience | Only act on A+ setups; avoid overtrading. |
| Psychology | Build confidence through competence and repetition. |