What is the 7% loss rule?
The seven percent loss rule is a disciplined risk management guideline famously advocated by legendary growth investor William O'Neil in his CAN SLIM investment strategy. It dictates that an investor should never allow a losing stock position to decline by more than seven percent from their original purchase price. By strictly enforcing this predetermined stop-loss threshold, investors protect their core capital from catastrophic market downturns, prevent minor paper losses from snowballing into portfolio-destroying disasters, and maintain the financial agility needed to pursue more successful investment opportunities.
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