Richard Donchian graduates from Yale with a BA in economics and begins his Wall Street career in 1930. From 1933-1935 he writes a technical market letter for Hemphill, Noyes & Co. For several years thereafter, he publishes a stock market service, "Security Pilot," and sells it to brokerage houses. During WW II he serves as an Air Force statistical control officer with a group they call the "Whiz Kids." For two years after the war, he acts as economic trend analyst and market letter writer for Shearson Hamill & Co. Quotes from his "Market Outlook" letters appear in the Wall Street Journal and other financial publications. He joins Hayden, Stone in 1960 and becomes VP and Director of Commodity Research. He writes numerous articles including "Trend Following Methods in Commodity Price Analysis."
Donchian's 20 Trading Guides (First publication: 1934)
General Guides:
Beware of acting immediately on a widespread public opinion. Even if correct, it will usually delay the move.
From a period of dullness and inactivity, watch for and prepare to follow a move in the direction in which volume increases.
Limit losses and ride profits, irrespective of all other rules.
Light commitments are advisable when market position is not certain. Clearly defined moves are signaled frequently enough to make life interesting and concentration on these moves will prevent unprofitable whip-sawing.
Seldom take a position in the direction of an immediately preceding three-day move. Wait for a one-day reversal.
Judicious use of stop orders is a valuable aid to profitable trading. Stops may be used to protect profits, to limit losses, and from certain formations such as triangular foci to take positions. Stop orders are apt to be more valuable and less treacherous if used in proper relation the the chart formation.
In a market in which upswings are likely to equal or exceed downswings, heavier position should be taken for the upswings for percentage reasons - a decline from 50 to 25 will net only 50% profit, whereas an advance from 25 to 50 will net 100%
In taking a position, price orders are allowable. In closing a position, use market orders."
Buy strong-acting, strong-background commodities and sell weak ones, subject to all other rules.
Moves in which rails lead or participate strongly are usually more worth following than moves in which rails lag.
A study of the capitalization of a company, the degree of activity of an issue, and whether an issue is a lethargic truck horse or a spirited race horse is fully as important as a study of statistical reports.
Technical Guides:
A move followed by a sideways range often precedes another move of almost equal extent in the same direction as the original move. Generally, when the second move from the sideways range has run its course, a counter move approaching the sideways range may be expected.
Reversal or resistance to a move is likely to be encountered
0n reaching levels at which in the past, the commodity has fluctuated for a considerable length of time within a narrow range
On approaching highs or lows
Watch for good buying or selling opportunities when trend lines are approached, especially on medium or dull volume. Be sure such a line has not been hugged or hit too frequently.
Watch for "crawling along" or repeated bumping of minor or major trend lines and prepare to see such trend lines broken.
Breaking of minor trend lines counter to the major trend gives most other important position taking signals. Positions can be taken or reversed on stop at such places.
Triangles of ether slope may mean either accumulation or distribution depending on other considerations although triangles are usually broken on the flat side.
Watch for volume climax, especially after a long move.
Don't count on gaps being closed unless you can distinguish between breakaway gaps, normal gaps and exhaustion gaps.
During a move, take or increase positions in the direction of the move at the market the morning following any one-day reversal, however slight the reversal may be, especially if volume declines on the reversal.
ED Syekota...
Friday, April 10, 2020
Bruce Kovner is a legend.
Bruce Kovner – Taxi Driver To Hedge Fund Billionaire Trader
Bruce Kovner is a legend.
America is the land of opportunity and the Bruce Kovner story shows a man who took full advantage of it. From driving a taxi to running a hedge fund, Caxton Associates starting in 1983, Bruce was worth $5.3 billion in 2016.
It didn’t happen over night.
Kovner graduated from Harvard College in 1996 and while driving a cab in New York, he was also at Julliard where he was learning the harpsichord. Must be a lot of spare time when driving cabs because he started to watch the financial markets and in 1977, got on board the soybean market that was in a bull run.
Beginners luck or a sign of success to come, Bruce turned $3000 to $45000….and then to $20000 (markets can be the best place for education) and that was enough to get him diving head first into trading.
Commodities Corp & Michael Marcus
Bruce started trading with the famous Commodities Corp and it was there that he met one of his biggest influences, Michael Marcus. As traders, we’ve all heard that the mind plays a big part in success and that is what Marcus was teaching Bruce. He had it ingrained that if you focused and put in the work, good things can happen.
You can make a million.
You can be successful.
During his time at CC, Bruce averaged 90% in 10 years. Considering that amount of money that was being traded, that is an incredible number (and a lot of money)
Bruce Kovner’s Net Worth According To Forbes
Bruce Kovener’s net worth, according to Forbes sits at $5.3 Billion as of 9th April 2016 .
Trading Strategy Of Bruce Kovner
With this kind of success, you know people want to know how he traded. Remember the lesson from Michael Marcus that was mentioned above? I imagine that was the biggest part of his trading system
What we do know is the Bruce was a macro trader. His trading focus centered around commodities and currencies. He didn’t trade strictly on the technical aspects but although he did use it, he needed to understand why the market should be moving.
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.
He was cut-throat in his trading and when he took a position…..it was because he felt a lot of people were about to find out how wrong they were on their own trades.
Some think Kovner was a trend follower and while he may have at times, if he was looking to profit from those about to get hurt, he also had to have an idea the trend was ending. It’s those turning points if you catch them that can explode your trading account into equity highs.
Being a macro trader, he probably saw which way the bigger picture was turning and used a technical analysis approach for timing.
The Heisenberg Principle
Bruce is a firm believer in the Heisenberg Principle also known as the Uncertainty Principle. The general rule is: the less observed, the better the trade which really means if something is closely observed, the odds are it is going to be altered in the process.
How does that apply to trading?
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. Bruce goes on to say that “one of the traders I know does very well in the stock index markets by trying to figure out how the stock market can hurt the most traders. It seems to work for him.”
Bruce Kovner Thoughts on Technical Analysis
Bruce said that for him, “technical analysis is like a thermometer.” He believed that “if you are a responsible participant in the market, you always want to know where the market is — whether it is hot and excitable, or cold and stagnant. You want to know everything you can about the market to give you an edge.”
As you can see, Bruce combines both the fundamental aspects of a markets along with the technical signals a market is giving.
But technical analysis is not the holy grail that some traders in Forex, Futures…..virtually all markets…think it is.
Here is Bruce again: “Technical analysis, I think, has a great deal that is right and a great deal that is mumbo jumbo… There is a great deal of hype attached to technical analysis by some technicians who claim that it predicts the future. Technical analysis tracks the past; it does not predict the future. You have to use your own intelligence to draw conclusions about what the past activity of some traders may say about the future activity of other traders.
Risk Management Is Vital
“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.”
I know as traders we hear this all the time and it can feel like people are just spouting off what they have heard. When it comes from the experienced traders like Bruce Kovner, you should very well listen.
“Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.”
I’ve said that many times throughout this Forex blog because…..it is true! You must know every aspect of your trade long before you press the order button.
What about losing trades? Does he beat himself up about every loser? No. “Every so often, I take a loss that is significantly too large. But I never had a lot of difficulty with the process of losing money, as long as losses were the outcome of sound trading techniques.”
The Continuation of The Kovner Story
Bruce left Caxton in 2011 but he certainly has not slowed down. Living in Hobe Sound, Florida, Bruce and his wife Suzie are heavily involved in philanthropy through The Kovner Foundation with a focus on Education, the Arts, and an “opportunity society”. He is also Chairman of CAM Capital, which he established in January 2012 to manage his investment, trading and business activities,
Bruce Kovner’s Early Days – Quick Facts
Bruce Kovner is from a Jewish background
His Grandparents fled From Poland and Russia to America due to persecution, and they were absolutely penniless.
Bruce’s father was a Mechanical Engineer and the family worked their way up to Middle Class level eventually
Bruce Kovner credits his family for the belief that “Anything is possible in America with proper education and hard work.”
Bruce finished high school and entered Harvard University.
After graduating, he struggled to find what career path he would take and decided to take a doctoral program at Harvard’s John F. Kennedy School of Government. But guess what, he left before finishing his doctoral studies.
He ended up studying Piano and Harpsichord at Juilliard School In New York City.
He also ended up working on Political campaigns and this really did not lead him anywhere.
READ How Fred Made $1 Million Dollars From 40 Trades In 3 Months-You Wouldn't Believe What Happens Next!
Billionaire Trader Bruce Kovner’s Trading Highlights
In 28 years after starting Caxton Associates, Kovner never had a unprofitable year except in 1994 when the fund declined 2.5%.
Average annual returns for the hedge fund was 21%. This does not seem like much but if your hedge fund has a trading assets worth billions, then 21% is a huge amount of money to make in a year.
He made more than $12 billion in cumulative gains for that 28 year period.
Bruce Kovner Trading Quotes
Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature.
To make money, you have hold a position with conviction. It is hard to do so when you are following someone else
Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn’t go there if I am right
Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose
If you personalize losses, you can’t trade.
Finally: Bruce Kovner On Successful Traders
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.
forextradingstrategies4u.com
Bruce Kovner is a legend.
America is the land of opportunity and the Bruce Kovner story shows a man who took full advantage of it. From driving a taxi to running a hedge fund, Caxton Associates starting in 1983, Bruce was worth $5.3 billion in 2016.
It didn’t happen over night.
Kovner graduated from Harvard College in 1996 and while driving a cab in New York, he was also at Julliard where he was learning the harpsichord. Must be a lot of spare time when driving cabs because he started to watch the financial markets and in 1977, got on board the soybean market that was in a bull run.
Beginners luck or a sign of success to come, Bruce turned $3000 to $45000….and then to $20000 (markets can be the best place for education) and that was enough to get him diving head first into trading.
Commodities Corp & Michael Marcus
Bruce started trading with the famous Commodities Corp and it was there that he met one of his biggest influences, Michael Marcus. As traders, we’ve all heard that the mind plays a big part in success and that is what Marcus was teaching Bruce. He had it ingrained that if you focused and put in the work, good things can happen.
You can make a million.
You can be successful.
During his time at CC, Bruce averaged 90% in 10 years. Considering that amount of money that was being traded, that is an incredible number (and a lot of money)
Bruce Kovner’s Net Worth According To Forbes
Bruce Kovener’s net worth, according to Forbes sits at $5.3 Billion as of 9th April 2016 .
Trading Strategy Of Bruce Kovner
With this kind of success, you know people want to know how he traded. Remember the lesson from Michael Marcus that was mentioned above? I imagine that was the biggest part of his trading system
What we do know is the Bruce was a macro trader. His trading focus centered around commodities and currencies. He didn’t trade strictly on the technical aspects but although he did use it, he needed to understand why the market should be moving.
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.
He was cut-throat in his trading and when he took a position…..it was because he felt a lot of people were about to find out how wrong they were on their own trades.
Some think Kovner was a trend follower and while he may have at times, if he was looking to profit from those about to get hurt, he also had to have an idea the trend was ending. It’s those turning points if you catch them that can explode your trading account into equity highs.
Being a macro trader, he probably saw which way the bigger picture was turning and used a technical analysis approach for timing.
The Heisenberg Principle
Bruce is a firm believer in the Heisenberg Principle also known as the Uncertainty Principle. The general rule is: the less observed, the better the trade which really means if something is closely observed, the odds are it is going to be altered in the process.
How does that apply to trading?
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. Bruce goes on to say that “one of the traders I know does very well in the stock index markets by trying to figure out how the stock market can hurt the most traders. It seems to work for him.”
Bruce Kovner Thoughts on Technical Analysis
Bruce said that for him, “technical analysis is like a thermometer.” He believed that “if you are a responsible participant in the market, you always want to know where the market is — whether it is hot and excitable, or cold and stagnant. You want to know everything you can about the market to give you an edge.”
As you can see, Bruce combines both the fundamental aspects of a markets along with the technical signals a market is giving.
But technical analysis is not the holy grail that some traders in Forex, Futures…..virtually all markets…think it is.
Here is Bruce again: “Technical analysis, I think, has a great deal that is right and a great deal that is mumbo jumbo… There is a great deal of hype attached to technical analysis by some technicians who claim that it predicts the future. Technical analysis tracks the past; it does not predict the future. You have to use your own intelligence to draw conclusions about what the past activity of some traders may say about the future activity of other traders.
Risk Management Is Vital
“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.”
I know as traders we hear this all the time and it can feel like people are just spouting off what they have heard. When it comes from the experienced traders like Bruce Kovner, you should very well listen.
“Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.”
I’ve said that many times throughout this Forex blog because…..it is true! You must know every aspect of your trade long before you press the order button.
What about losing trades? Does he beat himself up about every loser? No. “Every so often, I take a loss that is significantly too large. But I never had a lot of difficulty with the process of losing money, as long as losses were the outcome of sound trading techniques.”
The Continuation of The Kovner Story
Bruce left Caxton in 2011 but he certainly has not slowed down. Living in Hobe Sound, Florida, Bruce and his wife Suzie are heavily involved in philanthropy through The Kovner Foundation with a focus on Education, the Arts, and an “opportunity society”. He is also Chairman of CAM Capital, which he established in January 2012 to manage his investment, trading and business activities,
Bruce Kovner’s Early Days – Quick Facts
Bruce Kovner is from a Jewish background
His Grandparents fled From Poland and Russia to America due to persecution, and they were absolutely penniless.
Bruce’s father was a Mechanical Engineer and the family worked their way up to Middle Class level eventually
Bruce Kovner credits his family for the belief that “Anything is possible in America with proper education and hard work.”
Bruce finished high school and entered Harvard University.
After graduating, he struggled to find what career path he would take and decided to take a doctoral program at Harvard’s John F. Kennedy School of Government. But guess what, he left before finishing his doctoral studies.
He ended up studying Piano and Harpsichord at Juilliard School In New York City.
He also ended up working on Political campaigns and this really did not lead him anywhere.
READ How Fred Made $1 Million Dollars From 40 Trades In 3 Months-You Wouldn't Believe What Happens Next!
Billionaire Trader Bruce Kovner’s Trading Highlights
In 28 years after starting Caxton Associates, Kovner never had a unprofitable year except in 1994 when the fund declined 2.5%.
Average annual returns for the hedge fund was 21%. This does not seem like much but if your hedge fund has a trading assets worth billions, then 21% is a huge amount of money to make in a year.
He made more than $12 billion in cumulative gains for that 28 year period.
Bruce Kovner Trading Quotes
Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature.
To make money, you have hold a position with conviction. It is hard to do so when you are following someone else
Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn’t go there if I am right
Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose
If you personalize losses, you can’t trade.
Finally: Bruce Kovner On Successful Traders
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.
forextradingstrategies4u.com
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