Mark Minervini Strategy | Think and Trade Like a Champion Part 1 | Technical and Fundamental Filters

By Kristoff De Turck - reviewed by Aldwin Keppens

~ 13 minutes read - Last update: Jan 14, 2025

Here is the article. 

Who is Mark Minervini?

He is a professional trader who left school at the age of 15 to focus fully on his passion. The financial markets and more specifically trading stocks. He was heavily influenced by other successful traders such as Jesse Livermore, Richard Love and Stan Weinstein, to name just a few.

Mark is one of the few traders who has managed to bring together both technical and fundamental analysis into one comprehensive strategy where both concepts reinforce each other. However, the key to consistent long-term success lies in how risk is handled.

He is living proof that with passion and perseverance great things are possible, and he was also interviewed for Momentum Masters: A Roundtable Interview with Super Traders and Jack Schwager's Stock Market Wizards, where top traders share their strategies and insights.

Two Times US Investing Champion

In 1997 he won the U.S. Investing Championship for the first time. Using $250,000 of his own hard-earned money, he achieved a remarkable 155% return.

In 2021, he dragged in the title again. This time with a starting amount of $1000,000. And if you thought 155% was already a strong result... His return in 2021 was a whopping 334%.

But what stands out most here is how these results were achieved...

When I see these kinds of returns, I immediately worry about one thing: the risk it took to achieve such extraordinary returns.

My reluctance and suspicion when seeing triple-digit returns have mainly to do with the equally "brilliant results" of quite a few self-proclaimed stock market gurus.

The vast majority of their extremely high returns are completely worthless once you take a closer look at their risk management. They take enormous risks with the logical consequence that the probability of a phenomenal return also increases. However, this has nothing to do with investing or trading; it is pure gambling.

None of that, however, with Mark"s approach. He is extremely risk-averse and takes great care to ensure that loss positions (which are part of any strategy) have minimal impact on his trading account. This is the only way to remain consistently successful over the long term.

With his long successful track record, he counters the Efficient Market Theory. A theory in financial science that states that in the price of securities such as stocks, all public information and future expectations are incorporated and it is therefore impossible to structurally achieve better than average investment results in the long run, except by luck.

In this article (Part 1), we are going to explain what the technical and fundamental conditions are before a stock can be selected as a genuine Minervini setup. Then we are going to translate these rules into screening filters to arrive at a true Minervini screen.

In Part 2, we will go deeper into the actual execution of the strategy.

• Where and when to open a position?
• How many shares can and should you buy, taking into account the amount of capital at your disposal and your maximum risk percentage?
• Where do you set the initial stop? When to raise your stop-loss?
• When to take profits?

We cannot stress enough that both these articles are just a summary of both the excellent books written by Minervini ("Think & Trade Like a Champion" and "Trade Like a Stock Market Wizard") which you absolutely must read if you want to understand and be able to grasp all the concepts in depth.

Out of respect for all the work and knowledge he continues to share, we are not posting an affiliate link here but are linking directly to his website. where you can also find more information about his Master Trader Program.

SEPA Ranking System Explained

The SEPA methodology stands for 'Specific Entry Point Analysis' and it represents the life's work of Mark Minervini. All the knowledge he gathered to become the trader he still is today is contained in his SEPA concept that he has developed and fine-tuned over the years. The SEPA analysis is based on three assumptions:

1. Timing matters: There are good and bad periods to buy stocks.

2. There is some degree of predictability: Stocks that have the potential to become big winners can be discovered before they rise excessively.

3. Exponential growth: By trading these stocks correctly, it is possible to turn a relatively small amount of money into a fortune in a relatively short period.

SEPA Key Elements

The above statements are finally translated and divided into five SEPA characteristics.

1. Trend: Almost every stock that experiences a huge price explosion does so from a pre-existing rising price trend. Therefore, correctly identifying the direction in which the stock is trending is very important.

2. Fundamentals: Moreover, almost all of these stocks are characterized by significant improvements in sales, earnings and margins. The best news is that this sudden improvement is already clearly manifested in the very beginning of the stock price appreciation.

3. Catalyst: Every superperformer owes its success to some kind of trigger. An event that had such an impact that the stock was suddenly discovered and wanted by a lot of market participants. Several things can be at the root of this. A new product that sells tremendously well, management sending out a positive earnings alert, quarterly results that are much better than what the market expected,...etc.

4. Entry Points: Another feature is that for each of these stocks, at least one but usually several specific price points can be identified at which you were able to buy the stock. These price points are characterized by a very good risk/reward ratio. It is essential to recognize and exploit them to take maximum advantage of the subsequent price rise. If you fail to do this, you are more likely to be stopped out each time.

5. Exit Points: Exit points are important in two ways. First, as a safeguard against loss positions that are an inherent part of any strategy. The stop loss ensures that losses remain small and do not turn into large losses that are detrimental to the available trading capital. But clear rules are also needed to secure profits in time. Every price surge eventually comes to an end and it is important to adequately protect accumulated profits and cash out in time.

Stage Analysis

The Stage Analysis concept is not new and assumes that each stock is in one of four stages, including:

Stage 1 - Consolidation

Stage 2 - Accumulation (uptrend)

Stage 3 - Distribution

Stage 4 - Capitulation (downtrend)

The book discusses the 4 stages in further detail. However, it would lead us too far to go into them in depth in this article. An extensive analysis and application can be found in Stan Weinstein's excellent book "Secrets for Profiting in Bull and Bear Markets".

Mark Minervini concentrates his SEPA analysis exclusively on the stage when stocks are rising (Stage 2). Indeed, his strategy assumes that any stock that rises extremely does so from an existing uptrend.

Trend Template Rules

The technical conditions are the blueprint of its strategy. A stock that does not meet all the conditions listed below irrevocably falls off the list of possible candidates. Even stocks with excellent fundamentals must meet these before they can be considered for trading.

Moving Averages

• The current stock price is above the 50-day (10-week), 150-day (30-week) and 200-day (40-week) Simple Moving Average price line.

• The 200-day moving average line is trending up for at least 1 month (preferably 4-5 months minimum in most cases).

• The 50-day (10-week) moving average is above both the 150-day and 200-day moving averages.

• The 150-day moving average is above the 200-day moving average.

52-week High and 52-week Low rules

• The current stock price is at least 30 percent above its 52-week low (many of the best selections will be 100, 200, 300 or even greater above their 52-week low before they emerge from a solid consolidation period and mount a large-scale advance).

• The current stock price is within at least 25 percent of its 52-week high (the closer to a new high the better).

Relative Strength

• The relative strength ranking is no less than 70, and preferable in the 80s or 90s, which will generally be the case with the better selections.