Friday, September 13, 2013

William O'Neil: Outperforming the Markets

William O'Neil: Outperforming the Markets


“If you want to improve your trading you have to control yourself.” – Norman Welz

William J. O'Neil was delivered as a bouncing baby boy in March 25, 1933, in Oklahoma City. He grew up in Texas. In Dallas, Texas, he attended Woodrow Wilson High School. After he got his first degree in business from Southern Methodist University, he joined the USAF (the United States Air Force). He later joined a brokerage firm and began to develop some trading methods. William has been influenced by many bright trading minds, including Gerald Loeb and Nicolas Darvas. In 1960, he attended Harvard Business School in order to study Management Development.

At the age of 30, he acquired a seat on the New York Stock Exchange (being the youngest person to do so at that time). In 1963, he started William O'Neil + Co. Incorporated. The company made some innovative contributions to the trading world – something that’s still relevant to more than 10,000 companies. He created Daily Graphs in 1972 and founded O'Neil Data Systems, Inc. in 1973. In 1984, he started Investor's Daily, which has proven to be a formidable rival to The Wall Street Journal. He launched MarketSmith, an online shares research tool, in 2010.  He wrote a number of books, some of which are “How To Make Money In Stocks (1988),” “24 Essential Lessons For Investment Success (1999),” and “The Successful Investor (2003).’’ He’s won certain awards in various fields. His official website is:

Here are some simple but weighty lessons that can be learned from William O'Neil:

  1. William invented the renowned CAN SLIM strategy; which has enabled him to become the best-performing trader in his company. This strategy incorporates fundamental and chart-based trading approaches, with the selection of the stocks that are the most promising. If you’re interested in CANSLIM and how it helps in trading, you’d need to study it. If you’ve a great strategy already, congrats! You’ll just need to stick to it.

  1. The markets have a knack for going against the expectation of the public, and because of this, what most analysts are saying can’t be relied on. Most analysts tend to mislead the public by trying to drive home their hypotheses, which aren’t always accurate. Expert and personal forecasts can’t enable you to outperform the markets constantly. What’ll eventually help you are the markets and the realities on them. 

  1. It’s common for some people to call long trades because they think a market is oversold, but in most cases the market would trend further southward. The same is true of a bull market: when people think it’s overbought and should experience a protracted pullback, then it would rally further. This means that one should trade what one sees, and doesn’t need to trade against the trend.

  1. It’s appalling that some traders tend to talk of how much they can make in a day or in a month (in terms of pips, points or base currency). They tend to ignore the fact that the only thing they can control is how much they lose. Just focus on losing as little as possible: that’s the secret to your outperforming the markets.

Conclusion: Blessed is he/she who considers risk and takes appropriate measures to curtail it. People risk too much because of overconfidence, which has brought many potential gurus’ dreams to an abrupt end. Then, it pays to be realistic when trading, so that one remains emotionless while speculating. Between 40% - 50% of one’s trades can end up in the negative territory, based on the price conditions. You’d do well to merely close your negative positions and look forward to other opportunities in the markets. Trading would proffer you with many great signals, and as such, your new trades may recover the losses you’ve sustained. You may refuse to be a failure in spite of the disappointment that come occasionally.

This piece is ended with a quote from William:

"The whole secret to winning and losing in the stock market is to lose the least amount possible when you're not right."

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

Eye-opening trading lessons: Lessons from Expert Traders

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