The Momentum Investor's Decision System

The momentum decision system is the most mechanically precise of the six schools. Where value and growth investors exercise judgment over months, the momentum investor makes binding, rule-based decisions within hours or days. Entry, exit, position sizing, market environment assessment — each has explicit criteria. The discipline required is not intellectual; it is emotional: the ability to follow the rules when every instinct says otherwise, to cut a loss before it becomes a disaster, and to add to a winner when it feels dangerous.

Why This Matters

Minervini's decision system is built on a simple arithmetic truth: if you lose small on your losers and gain large on your winners, the strategy is profitable even if you are wrong on the majority of trades. A 40% win rate with a 3:1 reward-to-risk ratio generates positive expected value. The system is designed not to predict which stocks will win — it is designed to ensure that when a stock wins, you make significantly more than you lose when one fails. The math does the rest.