INSIGHTS INTO THE MINDSET OF SUPER
TRADERS – Part 12
“I am actually trading because I learn a lot of important
life lessons from it. Trading helps me get to know myself. It helps me think
about why I believe things and why I do things.” - Van Eekelen
Name: Michael Platt
Date of Birth: December 12, 1968
Nationality: British
Occupation: Hedge fund titan
Career
Born in Preston, England, Michael
attended London School of Economics and earned a BSc with Honors. He was
influenced by his grannie who was an investor. With the help of his grannie, he
got his feet wet and was hooked. He began working at JP Morgan in 1991, being a
managing director in charge of value investing. He took advantage of challenges
and opportunities he encountered at JP Morgan.
He co-founded BlueCrest Capital
Management LLP in the year 2000, and that firm is now the Europe’s third
biggest hedge fund firm. The firm manages over 30 billion GBP and has 350
employees. They mainly employ systematic trading approaches, using computer
programs to facilitate the approaches.
As of April 2015, Michael was
worth 1.5 billion GBP (3.5 billion USD). He’s married and currently lives in
Geneva, Switzerland. He’s an avid lover of arts and paintings.
Insights:
- When you make
useful decisions in life, including trading, you’ll simply end up having
enough. You’ll not need to be striving after money. You’ll then see
trading as an interesting activity, not an onerous task. At the end,
you’ll be so rich to the extent that big money would not matter so much to
you. For example, Michael Platt has become so rich to the extent that he
once turned down an offer from George Soros. The latter wanted him to
manage more than $1 billion USD for a 0.5 percent management fee and a 10
percent performance fee. But Michael said his investors were willing to
pay management fees of 2% and performance fee of 20%. Many desperate
professionals would jump at such an offer.
- Please see the
quote at the bottom of this article. Risk control is extremely important
for your everlasting career as a trader. That’s your life insurance.
Michael acknowledges that risk management is the most important thing. In
bear markets, many funds crashed and burned, especially when they faced credit
crunches in 2008. Yet Michael finished the year with 6%. He avoided loss
and even made a small profit. What do you want those who lost to say?
- Hear! Hear!
Gamblers who think it’s stupid to risk less than 1% per trade. Risk
control is something that must be enforced in trading. One of BlueCrest’s
secrets is to make sure that each of their traders doesn’t go below 3%
drawdown, or they’re deprived of 50% of the portfolio they manage. Another
drawdown of 3% (making a total of 6%) would make a trader get their entire
portfolio allocation removed. They may even lose their job if it’s found
that their trading method is suicidal. I currently risk 0.25% of my
account per trader, and so, I’ll need to lose 12 trades in a row before I
can go down 3%. This is a good plan for survival.
- Many so-called
professionals out there give advice that helps others make money, but not
themselves. Ideas from professionals are valuable in that you can make
profits from them, before the professionals themselves do so (they may not
even do so). You can really take advantage of comments that are made by
those trading professionals.
- There are winning
strategies, and you need to find one of those so that you can attain
ultimate financial freedom, as a result of consistent profits in the
markets. BlueCrest Capital International fund hasn’t had a negative year
since it was started – though some years were better than others. For
example, the fund made a profit of 41% in 2009, earning hundreds of
millions of dollars in fees only.
- Leda Braga,
featured in one of my past articles, is a partner of Michael at BlueCrest.
She manages a fund named BlueTrend. She’s a pro trader, and she has been a
blessing to BlueCrest. Great minds think alike, for like will attract
like. Do you have a good trader as a partner?
- Success attracts
more success. The more successful you’re, the more investors you’ll
attract and the richer you’re going to be. Because BlueCrest made a profit
of 4 billion USD in 2008, they got about 5 billion USD in additional
investment. But know this: the more you fail, the more investors you lose
and the poorer you become. So you must know what you’re doing.
- Michael bets his
own money alongside his investors. What a good trading idea! One trading
specialist once advised that if funds managers’ money is tied to the
portfolios they manage, there wouldn’t be rogue traders. When someone
trades a fund which belongs entirely to her/his clients, they may be
tempted to be careless because it’s not their money.
- Who encouraged
you to become a trade? You should be forever grateful to such a person
irrespective of what you’re currently facing as a trader. The advice to
start trading is really a billion-dollar advice. Michael was inspired and
encouraged by his late grannie, and he’s now a billionaire. I’m forever
grateful to my uncle who advised me to become a trader.
- Michael’s dad was
an engineer, and so, Michael wanted to study engineering. Suddenly, he
changed his mind and studied Economics instead. This prepared him for the
task ahead. Engineers can also become successful speculators; albeit the
lesson is that one does not always need to take up a career one’s dad
loves, especially if one doesn’t like the career.
- Michael started
small and he’s now bigger. Please learn from this. When your performance
is good, you’ll enjoy so much success in a relatively short period of
time. Michael’s firm is now perceived with a higher level of credibility,
even more than those who started the fund management business before them.
That’s really an ideal achievement.
Learn from that please.
Conclusion: A judicious
trader doesn’t act on impulses, whatever they may be. According to Joe Ross of
Tradingeducators.com, from a purely physical standpoint, it is essential to
minimize the potential impact that a losing trade may have on your account
balance. If you lose a lot on a single trade, it will sting. But if you limit
the amount of capital you risk on a single trade, it won't hurt at all. You can
pick yourself up easily and put on the next trade. It's much easier to take a
loss in stride when the real impact on your account balance is minimal.
This article is ended with a quote from
Michael. Please think about it. Safety first!
“I’ve never hit the 3 percent drawdown… Ego is how you lose money
in this business. I put a trade on, and if it doesn’t start working
straightaway, I respect the price action and cut it fast.”
What
Super Traders Don’t Want You To Know: http://advfnbooks.com/books/supertraders/index.html
Source:
www.tallinex.com
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