Bruce Kovner is the Greatest Market Wizard you've never heard of.
He averaged ~90% CAGR during his 10 years at Commodities Corp.
Then he generated a 21% CAGR for 28 years at his own fund.
Oh, and before that, he was a cab driver.
Here are his six trading principles ... 🧵
Principle 1: Have The Necessary Vision
"Mindset" gets thrown around a lot.
But it's extremely important.
Kovner's first (and greatest) lesson is that if you apply yourself, great things could happen.
"Michael Marcus taught me that it is possible to make a million dollars."
Principle 2: Risk Management Is Paramount
Have you noticed a theme? The world's best traders place risk management above making money.
Kovner ALWAYS uses stops.
Before he enters a position he knows when/where he's getting out.
"It's the only way I can sleep at night."
Principle 3: Have A Trader's Mindset
The Trader's Mindset is the willingness to make mistakes regularly.
Losing is part of a winning trading strategy.
Let that sink in.
You MUST lose regularly to win long-term.
"If you personalize these losses, you can't trade."
Principle 4: Macro Is Important
Kovner can't hold a position unless he understands why the market SHOULD move.
This means he MUST understand the macro picture to place directional bets on those macro views.
"Markets lead because there are people who know more than you do."
Principle 5: Master Price Action
Kovner believed in combining fundamentals with price action.
"Technical analysis is like a thermometer."
Trading markets without technicals is like a doctor that doesn't take a patient's temperature.
Stacking Edges!
macro-ops.com/conditional-ed…
Principle 6: Obey The Heisenberg Principle
The more closely followed a market or stock, the more prone it is to false signals (breakouts, etc.).
Find Pain Trades (how markets can hurt the most people) and Tight Congestions in stocks that "shouldn't" be breaking out.
Zag-zig.
Recap: Kovner's Six Trading Principles
1) Have The Necessary Vision
2) Risk Management is Paramount
3) Have a Trader's Mindset
4) Macro is Important
5) Master Price Action
6) Obey Heisenberg
Read more about Kovner here: macro-ops.com/lessons-from-a…
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Here is my latest essay on Bruce Kovner.
I expanded a bit on this thread to more deeply explain Kovner's trading principles.
I hope you enjoy!
macro-ops.com/three-lessons-…
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