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June 1, 2025·10 min read·By Trading Awareness

Mark Minervini's SEPA Strategy: How a Two-Time US Investing Champion Trades Growth Stocks

Mark Minervini won the US Investing Championship twice with average annual returns above 220%. His SEPA methodology combines fundamental quality with precise technical timing. Here's how it works.

For educational purposes only. This article describes publicly documented trading strategies. Nothing here is investment advice. Trading involves substantial risk of loss.

Mark Minervini is one of the most decorated stock traders of the modern era. He won the US Investing Championship in 1997 with a 155% return, and again in 2021 with a 334% return — in a year where many growth traders were wiped out. His 1997–2000 compounded annual return exceeded 220%. He went on to write Trade Like a Stock Market Wizard and Think and Trade Like a Champion, laying out his methodology in full.

His system is called SEPA — Specific Entry Point Analysis. The core idea is deceptively simple: only buy the right stocks, at the right time, with strict risk control.

The four pillars of SEPA

SEPA filters candidates through four lenses before a trade is ever considered:

1. Trend: The stock must be in a clear Stage 2 uptrend (see Stan Weinstein below). The 50-day SMA above the 150-day SMA above the 200-day SMA, all pointing upward. Minervini calls this the trend template. No uptrend = no trade, full stop.
2. Fundamentals: Minervini wants accelerating earnings — not just positive earnings, but earnings that are growing faster this quarter than last quarter. Sales acceleration and expanding margins are bonuses. He's looking for companies that are genuinely changing.
3. Catalyst: Every great stock move has a reason. New product, new market, regulatory change, management change, competitive disruption. The catalyst explains why the fundamentals are accelerating. Without a catalyst, earnings acceleration may be temporary.
4. Entry: This is where the "Specific Entry Point" part lives. Minervini does not chase extended stocks. He waits for a precise low-risk setup — the Volatility Contraction Pattern.

The Volatility Contraction Pattern (VCP)

The VCP is Minervini's signature technical setup. It describes what happens when a stock consolidates properly after a strong advance:

• The stock makes a series of contractions — each pullback is smaller than the last, both in price depth and in time.
• Volume contracts during the quiet phase, showing supply is drying up.
• A typical VCP might show contractions of 25%, then 15%, then 8%, then 4% — each one tighter than the previous.
• The final contraction — the "pivot point" — is the entry. The stock breaks above that final tight base on volume expansion.

The logic: the series of contractions shakes out weak holders. By the time the stock makes its final tight base, only strong hands remain. When buying pressure returns, there's little overhead supply left to absorb — so the stock can move quickly.

Minervini typically looks for stocks within 15% of their 52-week high when entering a VCP. He is emphatically not a dip buyer.

Risk management: the non-negotiable part

Minervini is explicit that his returns come as much from his loss management as from his stock picking. His rules:

• Maximum loss per trade: 10%. Most of his stops are tighter — 6–8% below entry on a normal VCP. He accepts being stopped out and re-entering if the stock recovers.
• He never averages down. If a stock moves against him, it has proven his thesis wrong. He exits, never adds to a losing position.
• Position sizing: He sizes positions so that a full stop-out costs no more than 0.5–1% of portfolio equity. This lets him survive long losing streaks without impairment.
• Cut back in bad markets: When the broad market is in a downtrend (Risk-Off), Minervini moves to cash. He does not fight the tape. His results are driven by being aggressive when conditions favour him and dormant when they don't.

Famous trades and documented results

Minervini's most cited trade was buying AMGN (Amgen) in the late 1990s as it emerged from a long base with explosive earnings acceleration. He documented multiple 100%+ gains in single trades during his Championship year using the same VCP discipline.

His 2021 Championship win — 334% in 12 months — came during an extremely difficult year for growth stocks. His ability to move to cash quickly when the market turned and re-engage when setups reappeared was the decisive factor.

How to apply Minervini's ideas with Trading Awareness

• Use the Leaders tab to identify stocks in confirmed uptrends (50d SMA above 200d SMA, high RS score).
• Use the Breadth tab's Market Tone to confirm you are in a Risk-On environment before entering trades.
• On the Charting tab, look for stocks near 52-week highs showing tight price action on low volume — the visual signature of a VCP building.
• The Gainers tab surfaces stocks making large moves on high volume — these are often VCP breakouts in progress.