,
10 tweets,
2 min read
Read on Twitter
1/ Risk Management
Something majority of the research analysts & newsletter writers don't need to worry about.
Those of us who work with real money, and have clients responsibilities day in and day out, understand a thing or two about risk management.
Something majority of the research analysts & newsletter writers don't need to worry about.
Those of us who work with real money, and have clients responsibilities day in and day out, understand a thing or two about risk management.
2/ If there was ever a bunch of quotes from just one trading great that could explain risk management — it would Paul Tudor Jones.
3/ "The most important rule of trading is to play great defense, not great offense."
I live by this quote when I am in a trading mindset. I have an unbelievably high intolerance for losses, and a huge amount of patience to let those trades showing me profit run, run & run.
I live by this quote when I am in a trading mindset. I have an unbelievably high intolerance for losses, and a huge amount of patience to let those trades showing me profit run, run & run.
4/ Paul Tudor Jones once said that if you control your risk in the right way, risking 1 dollar to make 4, 5 or even 6 dollars, you could be a "complete imbecile" and still be profitable in the long run.
It comes down to understanding maths on any given risk to reward setup.
It comes down to understanding maths on any given risk to reward setup.
5/ Furthermore, there is a need for analysts & newsletter writers to discuss the "whys" of financial markets.
"I see the younger generation hampered by the need to understand and rationalize why something should go up or down."
"I see the younger generation hampered by the need to understand and rationalize why something should go up or down."
6/ Don't pay too much attention to lengthy newsletter narratives, bombardments of storylines and media noise.
You've heard me say this many times here: the "why" is not important. Just take care of your risk management and continue to perfect your trading edge.
You've heard me say this many times here: the "why" is not important. Just take care of your risk management and continue to perfect your trading edge.
7/ When you are investing someone else's money — you ought to respect it over your fancy academic theories & narratives.
"If I have positions going against me, I get right out; if they are going for me, I keep them."
This is risk management at its core.
"If I have positions going against me, I get right out; if they are going for me, I keep them."
This is risk management at its core.
8/ Away from Paul Tudor Jones's quotes on trading seen above, which have really resonated with me for years and years, I also like to read about the way other professionals from different careers manage and control risk.
9/ But at the end of the day, the art & craft of trading — creating alpha in markets totally uncorrelated to US equity beta (or any other asset) — is not for the fainthearted.
Just remember that the "reward is in the risk" so manage the risk well and you shall be compensated.
Just remember that the "reward is in the risk" so manage the risk well and you shall be compensated.
10/ “Without struggle, success has no value.”
Aaron Lauritsen
Aaron Lauritsen
