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Bruce Kovner Trend Following Legend & Market Wizard

Bruce Kovner started in the mid 1970s. He traded a $4,000 position up to $45,000 in a period of a month of and a half. However he lost half of this amount and what was most striking he lost his profit in only one hour. Trading without a well thought out plan can be devastating. There is no free lunch when you are trading and trend following. Bruce Kovner learned the hard way. He was still up tremendously however the velocity of his give back was searing.

Kovner got his pedigree from commodities corp, the breeding ground for trend followers and market wizards. He met Michael Marcus who learned under Ed Seykota. Most successful trend followers have a pedigree. I know this first hand as I have invested with many offspring of turtle traders and others that have had mentors. I myself learned and ingrained my trading psyche by having mentors.

Michael Marcus taught Bruce Kovner one thing very important. Quoting Michael Marcus’s statement
“Michael taught me one thing that was incredibly important. He taught me that you could make a million dollars. He showed me that if you applied yourself, great things could happen”.

Kovner knew from his experience that TERRIBLE things could also happen if he did not have risk management or a trading plan when he trend followed. Trend following is not easy or something that can be learned very quickly. The bigger issue is how to think as a trader…even actually how to think as an investor when you invest with a trend following money manager or commodity trading adviser. You will always go through draw downs and have losses. It is how you take them. There are investors that think that they can go through a 20% draw down until it happens. They want out at 7%.

Those type of investors will never succeed. There is no free lunch. Out of a large database of commodity trading advisers there are only a handful who have survived more than a decade and do not have draw downs exceeding in the 30% range. Even with this, these surviving commodity trading advisers whom most are trend followers at best have CAR averages in the 15% range ( some slightly higher). This is the reality. There is no escaping it. On average these handful of trend followers make 15% on average over time and to date their worst draw downs are in the 30% range + ( and that their worst draw down is always ahead of them).

The key is to compound money. If one can compound at 15% for long periods of time…and they have the time..they can create wealth. I showed that in the article from Marhedge.

The biggest mistake that so many make is that trading is easy. They think they can quit their day job, buy a course and make 30% or more a year.
The only reality is that the majority of these will fail. If I wanted to stop trading, learn medicine via a course, I strongly doubt I would make a good doctor.

As my goal is to compound money…find the best money managers…( if there is such a term best money managers)…buy their inevitable draw downs…understand their risk measures…allocate small amounts of risk capital…have patience…let compounding work if the markets are favorable…and see what happens. More so, take your time to learn to trade. It is a long process. It took me a long time to finally get it. Finally get it means, not finding the magic system or indicator…rather how to approach risk…how to accept the uncertainty while trading…how to develop the confidence in my robust simple trading methodology…and look at the big picture over many years…and decades.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.
This website contains references to hypothetical trading results This website contains references to hypothetical trading results.
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. 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
** THE MATERIAL DISPLAYED ON THIS WEBSITE IS INTENDED FOR EDUCATIONAL PURPOSES ONLY.

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