Mark Minervini

Using a simplified probability assumption about price movement after the buy point.

Creates an objective reference for position management and risk assessment

Keeps losses contained so winners can outweigh losers under a favorable R:R

Achieves a 3:1 reward-to-risk ratio when paired with a 5% stop, creating positive expectancy

Smaller targets are easier to find and allow more frequent compounding of returns

Compounding the edge by taking many independent positive-expectancy bets increases returns

Turning the edge over more times increases compounded returns

To appreciate asymmetry and avoid underestimating potential loss or overestimating gains

Predicting tops is unreliable and distracts from executing a disciplined trading process

Prevents overconfidence in continuous gains and helps with position sizing and planning