INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 5
“I had done alright at school and was regarded in my
earlier profession as a clever and steady worker, but nothing of this was of
any use in trading.” – Tomorton
(Source: Trade2win.com)
Name: Stanley Druckenmiller
Country: USA
Date of birth: June 14, 1953
Profession: Super trader and philanthropist
Career
A son of a chemical engineer, Stanley Druckenmiller was born
in Pittsburgh, Pennsylvania, USA, into a middle class family. He got his BA in
English and Economics at Bowdoin College (1975). He started a PhD program in
Economics at the University of Michigan, but he didn’t finish the program
because he was offered a job at Pittsburgh National Bank. He started his own company - Duquesne Capital
Management – in 1981.
He also had some working experience in various capacities,
including working for George Soros. He stopped working for Soros in the year
2000. He’s featured in Jack Schwager’s book titled: “The New Market Wizards.”
In August 2010, he retired from trading public money when he
closed his hedge fund: Duquesne Capital
Management. He said that the constant effort to generated decent profits for
his investors was taking toll on his emotional health. He did so because he
felt he wasn’t making enough profits for his investors, for he thought that it
was difficult to make profits when handling huge sums of money. Prior to this time,
his fund was generating yearly profits of about 30% for 30 consecutive years,
although there was a recent year in which a loss of only 5% was generated.
Needless to say, the loss was recovered. By the time he closed his hedge fund,
that fund was worth over $12 billion.
Undoubtedly, Stanley is one of the best funds managers that
have ever lived on this planet. He got a salary of $260 million in the year
2008. At the time of writing this piece, Stanley was worth over $3 billion.
He’s a philanthropist who assists the causes he believes in.
Insights:
- Money shouldn’t
be your number one goal. Your number one goal should be trading mastery,
though money is simply one of the rewards that will follow. Don’t see
trading as a means to get rich quickly, but a means to improve a rare
skill, a skill that will make you stand out of millions of people who
simply sit down doing nothing, blaming others for their predicament.
Speculation is one of the remaining doors to succeed in the present world
of unequal opportunities and dismal economic situations. It’s one of the
rare opportunities that allow you to start with almost nothing and end up
being rich in the end. But remember that money isn’t everything. Even if
you spend all your life chasing money, you can’t be the richest person in
the world, and you’ll eventually discover that there are other things in
life that are more important than money. So you need a balanced view of
trading. There are other ways to attain happiness apart from one’s net
worth. Having money without these essential qualities in life will make
you a miserable millionaire/billionaire.
- Sure, it’s
possible to attain success in the markets. Stanley’s compound returns of
30% per annum for 30 years are an evidence of this fact. Wise people agree
with this fact and see the hypothesis of efficient market as rubbish. We
aren’t saying that success is easy, but we say that it’s possible despite
the fact that it’s hard to achieve and sustain. Traders who believe in
efficient market are indeed failures and losing traders who’ve given up.
They simply use efficient market theory to justify their permanent
failure. Yale professor Robert J. Shiller concluded that, the efficient
market hypothesis is one of the most remarkable errors in the history of
economic thought. Really, many known and unknown traders have been making
consistent profits for decades. Success needs conscientiousness and
diligence. Nothing good comes easily. For you to become a successful
trader, you need to work hard. Stanley Druckenmiller admitted that he
worked hard, for the markets took much of his time, resources and energy.
You just need to continue to work hard at doing the right thing so that
you can stay on top of the game.
- Success in life
requires serious effort and doggedness. You can’t be a successful market
speculator if you hate trading. The love you have for the market will
surely give you an advantage over those who hate the market. After much
hard work, you’ll find trading easier, more rewarding, fulfilling,
exciting and life transforming.
- Stanley likes to
use a top-down approach when speculating, doing so conscientiously. Don’t
trade or continue trading when you’re feeling bad. Good mood has a big
role to play in your success. Stanley stopped managing other people’s
money when he felt he could no longer deliver. That doesn’t mean he
stopped trading, for he’s still managing his own money privately.
- It’s a good
thing for you to know how to change your mind when a position isn’t going
as envisaged. Cut your loss. You may be correct about your prediction and
still lose money. You see, doing the right thing doesn’t always make you
look smart; until in the long run.
- When you know
there’s no reason not to enter a trade (all your entry criteria have been
met), trade with confidence. When you’re right in your prediction, try to
maximize your gain from the opportunity.
- Position sizing
is important in trading. This is the biggest determinant of the magnitude
of your profits and losses, plus whether your objectives will be met.
Conclusion: We
stay on in the game of speculation because we love it – just as some
professionals in other fields of human endeavors. Those who love their calling
don’t retire until some circumstances beyond their control force them to do so.
This piece is concluded with a quote from Stanley:
“The way to build long-term returns is through
preservation of capital and home runs.”
Source: www.tallinex.com
What Super Traders Don’t Want You To Know: Super Traders
No comments:
Post a Comment