What is the maximum percentage of equity you will risk on any individual trade? I intend to risk below 5 percent on a trade, allowing for poor executions. Occasionally I have taken losses
above that amount when major news caused a thin market to jump through my stops.
What was your single worst "thin market" loss? All markets are too thin when I want to get out of a bad position in a hurry. Most markets have, on occasion,
moved rapidly against me due to surprise news. As soon as the news is digested, the market thickens up again at a
new level. During the big sugar bull market when prices moved from 10 cents to 40 cents, I was carrying thousands
of contracts and I gave up several
cents getting out of my position. [Each cent in sugar is equivalent to $1,120 per
contract.]
Very few traders have enjoyed the spectacular success you have. What makes you different? I feel my success comes from my love of the markets. I am not a casual trader. It is my life. I have a passion
for trading. It is not merely a hobby or even a career choice for me. There is no question that this is what I am
supposed to do with my life.
What are the trading rules you live by? a.
Cut losses.
b.
Ride winners.
c.
Keep bets small.
d.
Follow the rules without question.
e.
Know when to break the rules.
Your last two rules are cute because they are contradictory. Seriously now, which do you believe: Follow the rules, or know when to break the rules? I believe both. Mostly I follow the rales. As I keep studying the markets, I sometimes find a new rale which
breaks and then replaces a previous rale. Sometimes I get to a personal breakpoint. When that happens, I just get
out of the markets altogether and take a vacation until I feel that I am ready to follow the rales again. Perhaps some
day, I will have a more explicit rale for breaking rales.
I don't think traders can follow rales for very long unless they reflect their own trading style. Eventually, a
breaking point is reached and the trader has to quit or change, or find a new set of rales he can follow. This seems to
be part of the process of evolution and growth of a trader.
