1933–2023 · Stocks · Founder of Investor's Business Daily
William O'Neil's CAN SLIM Method Explained
Study the biggest winners, buy the ones that look like them at the right point, and cut every loss at 7–8%.
Who they were
William J. O'Neil founded the research firm William O'Neil + Co. and the newspaper Investor's Business Daily. He studied the greatest stock market winners going back decades to find what they had in common before their big moves.
His book "How to Make Money in Stocks" (first published in 1988) summarised the findings in the acronym CAN SLIM and in a set of chart bases, the best known being the cup with handle.
Principles and rules
1. C and A
Strong Current quarterly earnings growth and strong Annual earnings growth.
2. N
Something New: a product, management or a new price high.
3. S, L and I
Supply and demand (volume on up days), Leader not laggard (strong relative strength) and Institutional sponsorship.
4. M
Market direction: most stocks follow the general market, so only buy in a confirmed uptrend.
5. Cut losses at 7–8%
Sell any stock that falls 7–8% below your buy price. Small, quick losses are the cost of finding big winners.
Key lessons
- Buy strength near new highs, out of a proper base.
- Respect the overall market trend.
- A fixed, small maximum loss per trade makes the method survivable.
Strategies from this method
How to practise it
The cup and handle strategy page has the chart rules. On Candlemind's US stocks, practise buying only breakouts from bases with a stop no further than 8% away.
Frequently asked questions
What does CAN SLIM stand for?
Current earnings, Annual earnings, New, Supply and demand, Leader or laggard, Institutional sponsorship and Market direction.
What is O'Neil's sell rule?
Cut losses when a stock falls 7–8% below the purchase price, without exception.
Summaries and paraphrases of public books and interviews, for education. Not investment advice.