Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

Chapter 1. The Evolution of Excellence: The O'Neil Trading Method

As portfolio managers who once ran money for William J. O'Neil, we have observed that a meaningful portion of the O'Neil "body of thought" is derived from the philosophies of those who preceded him, particularly the works of Richard Wyckoff and Jesse Livermore. When it comes to market thought, you can never entirely understand Bill O'Neil until you have read and understood these two gentlemen. Obviously, the techniques and philosophies of the famous trader Jesse Livermore, as presented in the classic Reminiscences of a Stock Operator, by Edwin Lefèvre and Livermore's own How to Trade in Stocks, figure heavily in the underlying pulse that governs the way Bill O'Neil and his stable of portfolio managers trade. Richard Wyckoff, as one of the first to write about Jesse Livermore in his original work, Jesse Livermore's Methods of Trading Stocks, espoused much of the common sense investment philosophies and maxims that have found their way into the writings and investment thought of William J. O'Neil. Even Nicolas Darvas, in his famous book, How I Made $2 Million in the Stock Market (Carol Publishing Group, 1998), laid the foundation for O'Neil's "chart bases" with his own "boxes," which he described as simply normal consolidation channels within which a stock's action was judged to be normal or abnormal.

The themes that echo from Wyckoff, Livermore, Darvas, and others weave the essential fabric from which "O'Neil–style" ...