World's Best Traders and some of their thoughts and beliefs

I am sure all traders have heard of the Warren Buffett's and the George Soras's of the trading World simply because they have made billions from their endeavours. I have been checking out the top 100 in the world but I am more interested in the guys who actually trade rather than invest.

When you have an 100 billion dollar fund as 30 - 50% annual return is just fantastic but for us more modest retail traders living in a different world a 30% annual return on say $20k is hardly going to make you a millionaire in under 5 years. Yes and before you say with compounding you can do it - that's just another ballgame and a totally separate "mind" skill.

So I have started off with a fairly well known trader who lists some of his trading style and beliefs. I would then like to go on to other great traders who might only be making a few million a year rather than billions - but with the skill set that enabled them to achieve it with modest capital and not with ten or hundred million.

i would also like to mention there is one outstanding trader in the FX trading contest who has taken his $25k starting capital on a demo account to over 1 million dollars in approximately a month. I am sure he would be the first to admit that he would not use such an aggressive risk strategy with real money and if you had say half a million of real money would you really want to take the chance of losing all of it with say 5 bad trades in a row just to double it ?

I look forward to hearing about other more recent great traders - but please not the Jessie's- the Warrens and the Georges - more about the low key guys who are content with just a few million every year from trading the forex markets.

This is Paul Tudor Jones's comments -

As reported in Market Wizards, Jones futures trading style and beliefs are summarized as follows ^[13]:

Contrarian attempt to buy and sell turning points. Keeps trying the single trade idea until he changes his mind, fundamentally. Otherwise, he keeps cutting his position size down. Then he trades the smallest amount when his trading is at its worst.
Considers himself as a premier market opportunist. When he develops an idea, he pursues it from a very-low-risk standpoint until he has been proven wrong repeatedly, or until he changes his viewpoint.
Swing trader, the best money is made at the market turns. Has missed a lot of meat in the middle, but catches a lot of tops and bottoms.
Spends his day making himself happy and relaxed. Gets out if a losing position is making him uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.
Never average losers. Decreases his trading size when he is doing poorly, increase when he is trading well.
He has mental stops. If it hits that number, he is out no matter what. He uses not only price stops, but time stops.
Monitors the whole portfolio equity (risk) in realtime.
He believes prices move first and fundamentals come second.
He doesn’t care about mistakes made 3 seconds ago, but what he is going to do from the next moment on.
Don't be a hero. Don't have an ego. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead.

Some interesting beliefs - lets look for more now ;-))

18 members like this

Comment by spikeone on October 13, 2012 at 10:40pm: He believes prices move first and fundamentals come second.

good point.

Comment by Peter jcp on October 14, 2012 at 12:26pm: Here's a view shared by many professional forex traders around the world although probably with different percentage weightings. I personally believe all 3 are so important and would probably give a fairly equal bias ( 33%) to all of them.

A "duff" strategy will not make you continual profits and I can assure you there are a very high percentage of poor strategies or methods out in the market place - with most of them encouraged by the industry. Well first rules in this game is that there will always be winners and losers and therefore the continual winners would prefer the losers to have poor strategies - ideally just good enough to keep them in the game but in the long run not continually successful.

Money Management is key for every strategy because no one method will work 100% of the time and over the long run - the law of averages will kick in and you will go through phases were you might win say 15 times in a row - but also lose 10 times consecutively - and that could easily blow your account without correct MM.

Finally you as the trader are a big part of whether you are successful or fail. Can you handle pressure, are your disciplined, do you have patience , are you inclined to gamble or take larger than normal risks - can you really focus well - are you visually and mathematically alert etcetc

I cannot believe some of the comments and thought of some of the traders portrayed by the internet as being highly successful- but then you find out they have only been trading for 2 or 4 yrs - and you get the feeling they just want to sell their wares

Also I think many who were successful at the start of this decade and prior to say 2009 - will struggle this next few years unless they adapt. HFT as changed price waves and made it harder to find longer rallies for swing traders If I was a top 3 market maker I would be doing by best to stay at the top and would make it harder for competitors who are after larger chunks of my profit.

Look forward to hearing about any successful independent retail traders making over $500k per annum- cannot seem to find the real ones on the internet ?

Comment by Peter jcp on October 14, 2012 at 5:32pm: Daniel J. Zanger is a technical stock analyst and equities trader. Having turned $10,775 into $18 million between June 1998 and December 1999,^[1] he is the world record holder for the largest percent change for a personal portfolio for a 12-month period of time and an 18-month period of time in the history of the stock market. This success brought him coverage from Fortune, Forbes, and Stocks & CommoditiesMagazines.^[2]

His world record for one-year stock market portfolio appreciation, gaining over 29,000%. In around two years, he turned $11,000 into $42 million.^[3] Fortune magazine, December 18, 2000, wrote an extensive article on Zanger, covering his trading style and personality.^[4]

Over a period of fifteen years, he spent over 10,000 hours studying every type of chart pattern formation imaginable. From Cup and Handle patterns to Falling Wedges, Ascending Triangles, Bull and Bear Flags and too many others to list here now. So experience and trading knowledge so important to his success

He combined those patterns with stocks that have unusually higher rates of growth and low number of shares that float. For the average stock list, growth rates must be up at least 40% for both earnings and revenues growth for their most recent quarters and most stocks that he lists have growth rates up 80, 90, 100 and sometimes up 200% and more. It's these high growth rates combined with stocks that have low number of shares that float that make them so explosive.

Comment by spikeone on October 15, 2012 at 6:40pm: chf for example ,low number of shares, and suddenly a safe haven?

Comment by Danda Danos Stasziek on October 16, 2012 at 2:17pm: Hi,

when we are talking about money. I always enjoyed look at this [1]. It's an EA which has made 189 BILLION and the author says it could earn much more, but the max available lots in MT4 are 999. I'm sure there will come a time period, where this EA would make the money again. But who knows it will come tomorrow or in 50 years. Anyway, what I've read there, he sent it to ATC(Automated Trading Championship), but it wasn't successful.

And if I could mention a trader, I would mention Paul Rotter aka The Flipper because of he has the czech blood (They emigrate from CZ when he was 9). I found on the internet that he has reportedly made $65-78 million per year for 10 years. And the well-known fact that he was a scalper. Some interviews: 1, 2...

Danda

Comment by Danda Danos Stasziek on October 16, 2012 at 2:37pm: “A trader should have no opinion. The stronger your opinion, the harder it is to get out of a losing position.”

Paul Rotter

Comment by Peter jcp on October 16, 2012 at 5:18pm: Hi Dando - Yes I had read all about Paul Rotter and he certainly had a skill for playing the markets and moving it his direction by ways many might look upon as not strictly "kosher" - ie- placing massive pending orders and then cancelling them ;-). Still to make that type of money year after year - he had to be good and I agree with him once you have a"bias" it can make it so difficult to get out of a losing trade.

Because I mainly take short term intraday trades I set out every day to buy and sell on the same pair and then once a direction is established - 8 times out of 10 - I will be with it. Then what normally happens out of say every 10 trades I might be taking 7 buys and only 3 sells on an up day - treating every minor intraday S & R as a reason to review.

At times this forum and many others remind me of being in a Law court - or for TV addicts like the old LA Law programme with the defence lawyer and the prosecutor. You will hear one side of the case - ie Like a sell - with a down bias looking chart and hear say 3-5 reasons whilst price should fall.

You then hear the other side - a bull trader with an up bias chart and 3-5 reasons whilst it will go up. In many cases - both sides of the argument can be true - its all down to timings and levels etc

All traders see bias - but it might be purely down to how they set there charts up etc.

The fact that short term bias can change tens of times in a trading day it then down to following the ones with the most strength - for what ever period of time - be it 30 minute - 3 hrs of even 3 days.

With regards to that EA ;-)

Whilst traders spend hours of their time coming up with the "holy grail" -( which might always work well on demo's but not the same in real live accounts) the industry - ie the main players and market makers spend millions developing their own systems to make sure - all the other systems will normally fail;-)

HFT as taken it to another level - changing wave patterns - and now its a case of even players trying to out "trump" each other on their own "hidden" super version - to set up false moves and take advantage of them.

Us poor retail traders will never be able to compete on a "level pitch" - but that does not matter I don't mind following and trying to make sure I am not tricked too often.

Always keep an open mind Dando in this market and play safe as much as you can - ie when in a nice profit - lock some in - just don't lose it all - you can always take another trade ;-))

Regards

Peter

Comment by Peter jcp on February 23, 2013 at 4:39pm: Last night around Market close time - it was made official that the UK had lost it's AAA credit rating and had been downgraded. What I thought was interesting was how this corresponded with the well know trader - Paul Tudor Jones - belief that - "price moves first and the fundamentals come second"

We know the UK as had some bad data releases so far this year - connected with retail sales and flat lining - so the fall in the GU is probably no surprise - but I am sure many "in the know" were aware the rating agencies were reviewing the situation - and so sold off more this last few weeks - knowing what was in the pipeline.

It was also interesting to see that the last 2 days of this week we had a recovery of 200 pips after a 700+ pip fall over the previous 10 days and that the confirmation came late on Friday afternoon / evening - after most of the market as switched off for the weekend ;-)

Will update this blog now with so more experienced day traders and their thoughts and ideas etc

Regards

Peter

Comment by Peter jcp on February 23, 2013 at 5:25pm: http://www.thedigeratilife.com/blog/index.php/2008/06/06/making-mon... - The Japanese day traders - can these stories be true ? - interesting article and follow ups - enjoy ;-)

Comment by Lisa on February 23, 2013 at 9:20pm: If you read books written by and about traders, you’ll find a lot of contradictory statements. Things like:

Technical vs Fundamentals for Trading…

"I haven't met a rich technician" – Jim Rogers.

"I always laugh at people who say "I've never met a rich technician" I love that! It’s such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician" -Marty Schwartz.

And about Diversification…

"Diversify your investments" – John Templeton.

"Diversification is a hedge for ignorance" – William O'Neil.

On Picking Bottoms and Tops…

"Don't bottom fish" – Peter Lynch.

"Don't try to buy at the bottom or sell at the top" – Bernard Baruch.

"Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich" – Jim Rogers.

"I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms." – Paul Tudor Jones.

So here we have a group of guys who have collectively taken billions of dollars out of the market and they don't agree about how to make money.

Is there anything they do agree on?

Just one: Money Management

"My basic advise is don't lose money" – Jim Rogers.

"I'm more concerned about controlling the downside. Learn to take the losses. The most important thing about making money is not to let your losses get out of hand." –Marty Schwartz.

"I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have" – Paul Tudor Jones.

"Rule number one of investing is never lose money. Rule number two is never forget rule number 1" – Warren Buffet.

"If you have an approach that makes money, then money management can make the difference between success and failure… … I try to be conservative in my risk management. I want to make sure I'll be around to play tomorrow. Risk control is essential." – Monroe Trout

"If you personalize losses, you can't trade." – Bruce Kovner.

"The best traders have no ego. You have to swallow your pride and get out of the losses." – Tom Baldwin

"Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical." Larry Hite.

Of course Ed Seykota is famous for pointing out that people get what they want out of trading and the markets. Some want to experience the emotional highs and lows and so losing their trading funds serves those purposes. For those of us who trade to make money, I say thanks to all those who chose to lose!

If you don’t know who these guys are, I recommend you read Jack Schwager’s books:Market Wizards and New Market Wizards. If you only have time to read one, read his first one because it’s about 10 times better than his second one.

If you’re currently trading and money management isn’t part of your initial plan, before you ever place an order, I suggest you stop and don’t put on another position until you have a plan you can live (and sleep well) with.

My ETF Trend Trading system incorporates an advanced position sizing calculation that evaluates the risk to reward ratio and keeps loses to a minimum so we can survive even a string of drawdowns.

I offer my Excel spreadsheet position sizing calculator free to all in my ETF Trading Tools section.

Watch for more of my tips in your email box soon.

I’ll cover some my ETF Trend Trading rules and my opinions, backed by my experience and the system, on the technical vs. fundamental, diversification and trend trading questions the experts quoted above are talking about.

Helping you retire on time,

Big A

800-743-0385