“The biggest risk in trading is hubris… This is because
being wrong is actually an integral part of success. A successful futures
trader makes many more losing trades than winning ones. The key is to recognize
and concede the mistakes and cut losses. And ride the winners.” – Bruce Kovner
Name: Bruce Kovner
Date of birth: February 25, 1945
Nationality: American
Website: Caxton.com
Career
Born in New York, Bruce is from Jewish ethnicity. His family
came from Czarist Russia, fleeing persecution for their political and religious
beliefs.
He loved football and piano. He went to Harvard for a PhD
program but he was unable to finish the program.
Following that, he tried a number of jobs, like playing
harpsichord, writing and driving a taxi. He discovered trading as a career
shortly after his first marriage (he’s been married twice). He began trading in
1977 with a borrowed 3,000 USD and ended up making 23,000 USD with it. During
the volatility the position was exposed to, the open profit even went up as
high as 40,000 USD. This made Bruce fall on love with the markets.
He worked under Michael Marcus - one of the trading geniuses
featured in my past articles – and soon gained respect as a disciplined and
reality-based trader. Eventually he founded his own firm; Caxton Associates,
LP. The firm became so successful and managed around 14 billion USD at the
apogee of their achievements.
Outside trading, Bruce Kovner isn’t well known, for he
seldom grants interviews and loves privacy so much. One source says that his
Fifth Avenue mansion in New York City, the Willard D. Straight House, features
a lead-lined room to protect against a chemical, biological, or dirty bomb
attack.
He’s no longer working as CEO of his firm: he’s retired from
that position.
As of March 2015, Bruce was worth 5 billion USD. He’s an
active philanthropist and he’s also engaged in other interesting
activities.
Insights:
- Bruce probably
wouldn’t make billions of dollars as a writer, or as a harpsichord player
or as a cab driver. Or can you tell me of anyone who makes billions
driving a cab? He was so lucky to
discover trading. You’re so lucky to be reading this article. Few jobs can
be as high paying as trading.
Imagine someone who started trading with $3,000 in 1977 and is
currently worth $5,000,000,000. That’s Bruce Kovner. What can you learn
from this?
- Trading success
will, undoubtedly, cost you hard work and unrelenting desperate effort to
achieve trading mastery. Without accepting this reality, you can’t be a
good trader. Anyone telling you otherwise is a liar (and your experiences
will later confirm the facts).
- There’s one
thing that can’t be avoided in trading: you must make mistakes constantly
and learn from them. That’s normal. You make a trading decision, and lose.
You repeat that and lose. You repeat that and lose. You make another
trading decision and lose. Then a good winning period comes out and you recover
the loss and move ahead. In time, you proficiency increases as you make
less mistakes (which is defined as not following your rules).
- Don’t follow the
masses, for they’re always wrong. When most traders move in one direction,
then the trend is about to change. If the masses were always right, most
traders would be rich. But this isn’t so. For example, there’ll soon be a
breakout after most traders have noticed an equilibrium phase.
- Short rallies in
bear markets and the other way round for bull markets.
- Bruce said risk
management is the most important thing to be well understood. Undertrade,
undertrade, undertrade is his second piece of advice. Whatever you think
your position ought to be, cut it at least in half.
This piece is ended with a quote from Bruce:
“My experience with novice traders is that they trade
three to five times too big. They are taking 5 to 10 percent risks on a trade
when they should be taking 1 to 2 percent risks. The emotional burden of
trading is substantial; on any given day, I could lose millions of dollars. If
you personalize these losses, you can’t trade.”
Source: www.tallinex.com
What Super Traders Don’t Want You To Know: Super Traders
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