Bruce Kovner’s Success Story – Bruce Kovner, a US billionaire and one of the trading superstars at Commodities Corporation (now part of Goldman Sachs) answers questions about the secret to his success after nearly 30 years in the trading world. In the book ‘Market Wizards’, Kovner answers various questions from Jack Schwager, the trader and author of the best-selling book. Here are some excerpts:
About the first rule of trading:
“There may be a lot of first rules in trading, but in my opinion, the first rule in trading is not to enter the market in a situation when you feel you are going to lose a lot for reasons you don’t understand.”
About the possibility of making millions of dollars in profit:
“Michael Marcus taught me one great thing. He convinced me that I could make millions of dollars in profit, not just maybe I could or would. It says that if I apply all the knowledge I have correctly, then it can happen.
It’s easy to forget that you can actually do it (make a million dollar profit). He showed me that if you take a stand and apply discipline, then you really can do it.”
About the elements of success in trading:
“I’m not sure that traders can clearly define why some traders are successful while others are not. For me there are 2 important elements. First, I can imagine a different condition or structure of the world from now, and I believe it will. I can imagine the price of soybeans will be 2 times from now or USD falling to 100 Yen (at that time USD / JPY was still above 100). Second, I am always disciplined with my trading plan and always think rationally even when under stress.
To be successful in trading, you need to be strong, independent, and sometimes at odds with the average trader. I mean, you have to have the courage to take a position that most traders don’t dare to take. But you have to be disciplined with trading measures, don’t be greedy or too confident, it will make you forget yourself and fall.”
About the importance of predictions or views on market conditions:
“I always trade based on my views or predictions about the state of the market. I don’t just enter the market based on technical analysis information. I admit technical analysis is great, but I won’t enter the market until I know why the market moves the way it does.
…Many traders know more than I do. I just gather everything (knowledge of those who know better) and draw conclusions. The market usually wins because there are people who know better than you.”
“The stock market is very short term, I mean trends can change in a short time. After rising to a certain level, the price will usually fall. Commodity markets are driven purely by the supply and demand for these commodity products. If the supply of a certain commodity is scarce the price will really go up, and usually the market will be in an uptrend for quite a long time.”
Source : www.mercenarytrader.com : Wisdom From Kovner