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Predicting the Markets

Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” – Bruce Kovner

This is an immense important quote from Bruce Kovner. This quote says that he is often not able to predict the market even if he tries his best to do so. But he also says that he is OK with that because he will make back much more as soon as he is on the right side of the market.

I totally agree with him and with my own short term trading I do the same. Instead of trying to predict the next movement of the market I try to figure out what happens “if the market goes the predicted way”. Is it worth for me to risk my money? Will I be able to make much more compared to what I have to risk? These are the questions I can answer and these are the right questions to ask instead of “what will the market do tomorrow”.

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Comments 2

Jean1975 on Friday, 22 April 2016 12:05

Great post.
The ability to follow your plan, make mistakes regularly and execute trade after trade with consistency and discipline is one of the hardest aspect to master for trading professionally.

I add also two more tough hurdles which personally I always have to take care about:
1) Leave opinions completely out from trading. The best trades always come when looking at the market movement with a neutral eye. Joe says "trade what you see". it seems easy but it is not!
2) Let the market "tell" you how much you can ask for each trade according to the market conditions. This also requires complete humilty in front of the market.

Great post. The ability to follow your plan, make mistakes regularly and execute trade after trade with consistency and discipline is one of the hardest aspect to master for trading professionally. I add also two more tough hurdles which personally I always have to take care about: 1) Leave opinions completely out from trading. The best trades always come when looking at the market movement with a neutral eye. Joe says "trade what you see". it seems easy but it is not! 2) Let the market "tell" you how much you can ask for each trade according to the market conditions. This also requires complete humilty in front of the market.
Andy Jordan on Friday, 22 April 2016 16:09

Agree with your 2 additional points (and there are probably many, many more) Jean. All this sounds very simple, doesn't it? Until you start trading.

Agree with your 2 additional points (and there are probably many, many more) Jean. All this sounds very simple, doesn't it? Until you start trading. ;)
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Wednesday, 18 October 2017

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.