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Lessons From A Trading Great: Jim Leitner

Jim Leitner is the greatest macro trader you’ve never heard of. He was once a currency expert on Wall Street, pulling billions from the markets, but now he plays the game through his own family office. Leitner understands the Macro Ops “go anywhere” mentality better than any other trader: Global macro is the willingness to opportunistically look at every idea that comes along, from micro situations to country-specific situations, across every asset category and every country in the world. It’s the combination of a broad top-down country analysis with a bottom-up micro analysis of companies. In many cases, after we […]

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Expected Value (EV) & Bayesian Analysis In Trading

An alternative title for a trader is “professional uncertainty manager.” Trading is a business of possibilities, not certainties. Despite our best efforts to predict financial markets, we’ll inevitably be wrong time and time again. Many of our bets will lose purely due to bad luck or unforeseen circumstances. It doesn’t matter if they were objectively good bets. Professional gamblers make for great traders because they too live in a world of managed uncertainty. A pro poker player knows that pocket Aces are statistically likely to beat pocket Kings 83% of the time. He’ll take this bet any day of the […]

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Goals, Expectations, & Inner Alignment In Trading

Why Do You Trade? It’s important to understand the true drivers behind why you trade the markets. The answer is different for everyone. We all have different circumstances, wants, wishes, and desires. Find yours. Below are common reasons people get involved: Entertainment Gambling Staying Informed About Economic and Political Developments Intellectual Pursuit/Curiosity Side Income Primary Income Advising Friends and Family Professionally Managing A Fund Your reasons influence how you attack markets. For example, people managing their own wealth might prioritize account growth over shallow drawdowns. Whereas the individual looking to run money professionally will need to focus on risk control. […]

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Avoiding Cognitive Biases In Trading

The following is part 2 of our 3-part psychology series. To read part 1, click here. On top of rampant emotions and a dire need to “fit in”, our biological evolution also had another side-effect. It made us lazy. Back in the day we were faced with an endless cycle of feast and famine. We’d have short periods of feeding followed by long periods of minimal sustenance living. So naturally we evolved to conserve our energy as much as possible. If given two options we’re conditioned to choose the one that involves the least amount of effort. This applies not […]

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Lessons From a Trading Great: Ray Dalio

Ray Dalio is the founder of Bridgewater. Two years ago, Bridgewater surpassed Soros’ Quantum fund for the title of most profitable hedge fund of all time; returning over $ 46 billion since inception. In your author’s humble opinion, Ray Dalio is one of the more original thinkers alive today. In the investing world he stands alone in his depth of understanding of how the “economic machine” works. His “principles” for life and management are like beautiful computer code designed to produce desired outcomes while stripping away the non-essential. The man is a philosophizing engineer taking apart and designing machines for […]

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Lessons from a Trading Great: Paul Tudor Jones (PTJ)

From Jack Schwager’s Market Wizards: October 1987 was a devastating month for most investors as the world stock markets witnessed a collapse that rivaled 1929. That same month, the Tudor Futures Fund, managed by Paul Tudor Jones, registered an incredible 62 percent return. Jones has always been a maverick trader. His trading style is unique and his performance is uncorrelated with other money managers. Perhaps most important, he has done what many thought impossible: combine five consecutive, triple-digit return years with very low equity retracements. (I am fudging slightly; in 1986, Paul’s fund realized only a 99.2 percent gain!) Jones […]

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Intuition In Trading And Investing: Can You Trust It?

Do you ever get that feeling that a certain trade will be huge? That you should size up on it and go for the jugular? You can’t exactly describe why this trade is the “one”, but you can definitely feel it. This feeling is what we call intuition. Now the question is… should you trust your intuition? Or is it just another feeling the market will abuse? Let’s find out. The Barking Up The Wrong Tree blog has a great article on intuition in which they introduce researcher Gary Klein. Klein has studied the use of intuition for over 30 […]

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Lessons From A Trading Great: Stanley Druckenmiller

The “greatest money making machine in history”, a man with “Jim Roger’s analytical ability, George Soros’ trading ability, and the stomach of a riverboat gambler” is how fund manager Scott Bessent describes Stanley Druckenmiller. That’s high praise, but if you look at Druckenmiller’s track record, you’ll find it’s well deserved. Druck averaged over 30% returns the last three decades — impressive. But what’s even more astonishing is the lack of volatility… the guy almost never loses. He never had a single down year and only had five losing quarters out of 120 altogether! That’s absolutely unheard of. And he did […]

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Lessons From A Trading Great: George Soros

Remember the scene from the 90’s classic, The Sandlot, where “Smalls” loses his father’s Babe Ruth autographed baseball to “The Beast” and the other kids question him in disbelief, saying: Smalls: I was gonna put the ball back. Squints: But it was signed by Babe Ruth! Smalls: Yeah, you keep telling me that! Who is she? Ham Porter: WHAT? WHAT? Kenny: The sultan of swat! Bertram: The king of crash! Timmy: The colossus of clout! Tommy: The colossus of clout! All: BABE RUTH! Ham Porter: THE GREAT BAMBINO! Smalls: Oh my god! You mean that’s the same guy? All: YES! […]

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Lessons from a Trading Great: Jesse Livermore

“Boy Wonder”, “Boy Plunger” and the “Great Bear of Wall St.” are a few of the monikers Jesse Livermore was known by. Livermore was immortalized in the trading classic Reminiscences of a Stock Operator by Edwin Lefevre — a book your author has read countless times over the years and still pulls new wisdom from with each revisit. Reminiscences has stood the test of time because it, more than any other book, explains the fundamental truths that lie at the heart of successful speculation. It’s no doubt a reflection of Livermore’s deep and intimate understanding of this great game. One […]

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