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.
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.
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.
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.
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.
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.
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.
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.
Mark Ritchie II shares insights from his trading journey, shaped by disciplined risk management and a strong focus on price action and fundamentals. Growing up with a renowned trader father, Mark’s passion for trading developed later in life through hands-on experience. He prioritizes finding stocks in long-term uptrends, identifying low-risk entries, and refining his edge over time. Emphasizing the importance of controlling emotions, Mark advocates starting small, scaling up only when confident in a strategy’s effectiveness. His trading approach adapts to varying market conditions, using timeless principles to maintain capital efficiency and manage risk, helping him navigate both bull and bear markets successfully.
About Mark Ritchie II:
Mark Ritchie II is a swing and growth trader, investor, and manager. He leads RTM Capital Advisors as a Managing Partner and CIO, a company that manages investments in U.S. stocks. He became well-known for winning Mark Minervini’s Triple Digit stock challenge in 2010 by making over triple digit returns in under six months. Between 2010 and 2014, he grew his managed funds tenfold, consistently compounding his portfolio year after year. This impressive traction earned him a feature in Mark Minervini’s Momentum Masters roundtable interview.
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