Mark Minervini

Determine a trade target that balances ease of occurrence with risk so you can execute that edge repeatedly.

Increase the number of independent trades to allow probabilities to realize expected outcomes.

Specifies preferred risk-reward targets (3:1, example 15% gain vs 5% loss).

A method to compute effective reward-to-risk by incorporating win rate (batting average) into payoff assessment.

Simple payoff example to show an asymmetric reward-to-risk on a 50/50 outcome.

Warning against trying to time perfect tops/bottoms or capture absolute peaks; emphasizes it's unnecessary and often infeasible.

Advocates reusing the favorable risk-reward bets frequently to compound returns.

May cause complacency and lack of active trade management when trading regularly

Overestimating or underestimating true expectancy, leading to poor sizing or strategy choice

Missed opportunities, poor execution, and likely worse results because perfect timing is infeasible

Reduces realized upside and undermines the intended risk-reward relationship

Fewer opportunities and potential lower compounded returns due to opportunity cost

Erodes the positive edge and can turn a profitable strategy into a losing one

Design trade targets and risk so you can re-use your edge frequently, increasing the number of successful opportunities within a time period.

Design trades with a favorable profit-to-risk ratio (preferably 3:1, minimum 2:1) so average winners outweigh losers.

Small controlled losses and larger, less-frequently captured gains can produce outsized returns even with modest win rates.

Prioritize an optimal, repeatable return target rather than chasing the biggest possible single gain, because repeated moderate wins compound effectively.

The cost of tying capital to a long-shot large gain is the lost potential from taking multiple smaller, more probable gains.