Lessons from Bruce Kovner

18 Sep 2018



The Importance of Risk Management: 

  • Under trade, under trade, under trade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half.

  • Whenever I enter a position, I have a predetermined stop. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.


A Trader’s Mindset

  • You have to be willing to make mistakes regularly; there is nothing wrong with it. Making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.

  • Successful traders are strong, independent, and contrary in the extreme. They are able to take positions others are unwilling to take. They are disciplined enough to take the right size positions. A greedy trader always blows out.


The Importance of Macro

I almost always trade on a market view; I don’t trade simply on technical information. I use technical analysis a great deal and it is terrific, but I can’t hold a position unless I understand why the market should move.


Mastering Price Action

  • It is very important for me to study the details of price action to see if I can observe something about how everybody is voting.

  • Studying the charts is absolutely critical and alerts me to existing disequilibria and potential changes.


Trading and The Heisenberg Principle

  • The general rule is: the less observed, the better the trade.

  • If something is closely observed, the odds are it is going to be altered in the process.

  • The more a price pattern is observed by speculators, the more prone you are to have false signals.

  • The more a market is the product of non-speculative activity, the greater the significance of technical breakouts.


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