I was reminded again recently of the legendary trader Mark Minervini, and his story is truly worth a deep dive. This guy participated in the U.S. Trading Championship twice and took home the first place both times, with a 155% return the first time and an even more outrageous 334.8% the second. Such achievements are top-tier in any field. Even more astonishing is that his worst year throughout his entire trading career still yielded a 128% return, and he reportedly only experienced a loss in one quarter, which was less than 1% of his principal.

This guy never keeps his methods secret and has been sharing his trading system openly. He says he’s been using the same approach for decades, and he’s become highly proficient at it. That’s why, in 2021, he entered the competition again—to prove that this system can withstand different market cycles. No matter how the market changes or how the assets rotate, it can still make money.

His core trading method is called SEPA, which stands for Specific Entry Point Analysis. In Chinese, it’s known as the Specific Entry Point Analysis Strategy. The essence of this method is simple yet practical: identify ultra-strong stocks that are trending upward both fundamentally and technically, enter at the most optimal points and times, and use strict risk control to achieve steady profits.

The first step is screening. Mark Minervini set up a trend filter using TradingView. The criteria are that the price and the 50-day moving average must be above the 150-day and 200-day moving averages, forming a bullish alignment. The 200-day moving average must be in an uptrend for at least a month, ideally four or five months. The current price should be at least 25% above the 52-week low, preferably over 100%. It should also be no more than 25% below the 52-week high, with closer to new highs being better. This screening can roughly eliminate over 90% of the junk stocks, leaving those that are in strong upward momentum.

The second step is waiting for a catalyst. Key factors include new product launches, important regulatory approvals, positive industry changes, major contracts signed, or technological breakthroughs—these can all serve as triggers to push the stock higher. At this stage, you can compare the stock to similar ultra-strong stocks in history to set expectations for its future movement.

The third step is to look for VCP, or Volatility Contraction Pattern, which is a consolidation pattern where price swings and volume gradually decrease. The longer a stock consolidates during a strong move, the larger its subsequent volatility tends to be. Mark Minervini often uses two main patterns.

One is the classic triple bottom. During a strong rally, the stock encounters resistance and pulls back, forming a low point, then begins consolidating. As volume and price decline, the lows get higher, eventually forming a textbook triple bottom. This horizontal or downward-converging pattern usually indicates a continuation of the uptrend, with a high probability of further gains. When it breaks out, volume and price typically rise together. To avoid false breakouts, it’s best to set stop-losses at the lowest point of the breakout candle or at least below the second low.

The other pattern is the cup and handle. It starts with a U-shaped bottom indicating steady price recovery, then enters a shorter consolidation phase forming the handle. The key is to identify the breakout of the handle, which must be accompanied by increased trading volume. In 2021, Minervini bought PAG stock, which was a textbook example of this pattern. After rising for over a year, it pulled back in May, then continued to rally in July, forming a cup shape. In August, it consolidated within a narrow channel, forming the handle. On September 1st, with a volume breakout, he entered the trade. The subsequent rise was substantial, and the price never returned to that level.

Finally, there’s the exit mechanism, which Mark Minervini developed based on years of experience. Knowing when to sell during a market downturn, recognizing warning signals before a crash—these details determine the ultimate profit. The success of this system hinges on strict and disciplined execution of these principles.