Bruce
Kovner, a US billionaire and one superstar trading in Commodities Corporation
(now part of Goldman Sachs) to answer questions about the secret of success
after nearly 30 years working in the world of trading. In the book 'Market
Wizards', Kovner answered various questions from Jack Schwager, trader and
author of the best seller. Here are some excerpts:
On
the first rule of trading:
"There
may be many first rule in trading, but in my opinion, the first rule in trading
is not to enter the market in a situation when you feel it suffered heavy
losses due to various reasons that you do not understand."
On
the possibility of gain millions of dollars:
"Michael
Marcus taught me one thing that is remarkable. He assured me that I could
profit millions of dollars, not just might be or will be. He said that if I
apply all the knowledge I have it right, then it could happen.
It's
easy to forget that you actually could do it (gain millions of dollars). He
showed me that if you take a position and discipline, then you really can do
it. "
On
elements of success in trading:
"I
am less confident trader can formulate clear why some traders succeed were
others do not. For me there are two important elements. First, I can imagine
the condition or structure a different world now, and I believe it will happen.
I can imagine the price of soybeans will be 2 times the current or USD which
fell to 100 yen (at the time USD / JPY is still above 100). Secondly, I was
always disciplined with trading plan and always think rationally though in a
state of distress.
To
be successful in trading, you must be strong, independent, and sometimes
contrary to traders in general. I mean, you have to take the position that most
traders do not dare take it. But you have to be disciplined with trading size,
do not get greedy or too confident, it will make you forget yourself and fall.
"
On
the significance of prediction or a view of the market conditions:
"I
have always been a trading point of view or my predictions regarding the state
of the market. I do not enter the market so just based on technical analysis
information. I admit that technical analysis is great, but I would not enter
the market before knew exactly why markets move like that.
...
Many traders who know more than me. My only collects items (knowledge of the
people who know better) and draw conclusions. The market usually wins because
there are people who know more than you. "
You
are trading in stocks and commodities, what's the difference?
"The
stock market is very short-lived, I mean the trend could change in a short
time. After rising to a certain level, the price will usually fall. Commodity
market is driven purely by demand and supply on the commodity products. If the
supply of certain medium rare commodity prices really go up, and the market
generally will be in the uptrend until quite a long time. "
Source:
www.mercenarytrader.com: Wisdom From Kovner