290 · Mark Ritchie II - Price-Action, Swing Trading Equities from the Long Side
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Deep Dive
WHY did Mark Ritchie II become a trader?
Mark's path to trading was indirect. He initially pursued nonprofit work but transitioned to the financial world out of necessity when his previous career path reached its limit and he needed to provide for his growing family. His interest in markets developed gradually through work experience with a family associate, where he was exposed to the dynamics of trading and the challenge of finding consistent profits.
WHY does Mark Ritchie II emphasize real money trading over paper trading?
Mark believes paper trading is a mistake because it omits the crucial emotional component of trading. He argues that experiencing the emotional impact of real losses, even small ones, is essential for developing discipline and learning effective risk management. He recommends starting with small amounts of real money to understand the psychological pressures of trading.
WHY does Mark Ritchie II focus on swing trading equities from the long side?
Mark primarily swing trades equities from the long side because he believes it offers a superior risk-reward profile. His process involves manually screening 600-1000 stocks daily, narrowing them down to watchlists based on criteria learned from his mentor, Mark Minervini. These criteria are rooted in timeless principles derived from the historical performance of winning stocks.
WHY doesn't Mark Ritchie II use technical indicators?
Mark doesn't use traditional technical indicators like stochastics, RSIs, or MACDs. He finds price and volume sufficient for his analysis. While he doesn't disparage those who use indicators, he hasn't found them helpful in his approach, which focuses on identifying stocks in long-term uptrends and spotting low-risk entry points based on price action.
WHY does Mark Ritchie II say "a bad plan is better than no plan"?
Mark believes any plan, even a flawed one, provides structure and discipline. He uses the analogy of chess, where a player with a simple strategy consistently applied will likely outperform someone making random moves. A bad plan, in his view, is one lacking risk management, sizing strategy, or exit plans. He emphasizes the importance of having a repeatable process, especially in today's information-saturated market.
How does Mark Ritchie II define a low-risk entry?
A low-risk entry for Mark involves a stock in a long-term uptrend, confirmed by weekly charts and the 200-day moving average. He looks for tight consolidations or pivot points that allow him to quickly determine if his assessment is correct, prioritizing capital efficiency. He avoids bottom fishing and emphasizes the importance of price confirming the fundamental story.
How does Mark Ritchie II manage exits?
Mark manages risk by setting stop-loss orders based on an acceptable risk point, typically a percentage between mid-single digits to a maximum of 8-10%, with a long-term average under 5%. Profit targets are determined by a multiple of his average loss, aiming for gains exceeding his average loss. He also considers technical factors like short-term extension and overall market conditions.
How has Mark Ritchie II performed throughout different market regimes?
Mark has achieved good long-term performance, with periods of aggressive trading and periods of inactivity. His process allows him to raise cash ahead of major declines, mitigating losses during bear markets. He finds choppy markets or periods of high volatility most challenging. His best performance typically comes after corrections and bear markets.
- Importance of consistent learning in trading
- Introduction of Mark Ritchie II and his background
Shownotes Transcript