Lessons from a Trading Great: Bruce Kovner

Another profile of a legendary trader by Macro Ops. This time it's Bruce Kovner who used to run hedge fund Caxton Associates.

On risk management:

The first rule of trading — there are probably many first rules — is don’t get caught in a situation in which you can lose a great deal of money for reasons you don’t understand.

I would say that risk management is the most important thing to be well understood. 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.

The emotional toll of trading:

The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.

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.

Some great thoughts on the trading mindset. I always recommend Jack Schwager's Market Wizards books for more on that subject (and the Macro Ops post borrows from that book's interview).

Full blog post here: Lessons from a Trading Great: Bruce Kovner