how to make money
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Stanley Druckenmiller talked a bit about Soros' style of trading... in one of the Market Wizard books. Some excellent insight here:
"I've learned many things from him, but perhaps the most significant is that it's not whether you're right or
wrong that's important, but how much money you make when you're right and how much you lose when
you're wrong. The few times that Soros has ever criticized me was when I was really right on a market and
didn't maximize the opportunity.
As an example, shortly after I had started working for Soros, I was very bearish on the dollar and put on a
large short position against the Deutsche mark. The position had started going in my favor, and I felt rather
proud of myself. Soros came into my office, and we talked about the trade.
"How big a position do you have?" he asked.
"One billion dollars," I answered.
"You call that a position?" he said dismissingly. He encouraged me to double my position. I did, and the
trade went dramatically further in our favor.
Soros has taught me that when you have tremendous conviction on a trade, you have to go for the
jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is
concerned, when you're right on something, you can't own enough.
Although I was not at Soros Management at the time, I've heard that prior to the Plaza Accord meeting in
the fall of 1985, other traders in the office had been piggybacking George and hence were long the yen going
into the meeting. When the yen opened 800 points higher on Monday morning, these traders couldn't believe
the size of their gains and anxiously started taking profits. Supposedly, George came bolting out of the door,
directing the other traders to stop selling the yen, telling them that he would assume their position. While
these other traders were congratulating themselves for having taken the biggest profit in their lives, Soros
was looking at the big picture: The government had just told him that the dollar was going to go down for the
next year, so why shouldn't he be a pig and buy more [yen]?
Soros is also the best loss taker I've ever seen. He doesn't care whether he wins or loses on a trade. If a
trade doesn't work, he's confident enough about his ability to win on other trades that he can easily walk
away from the position. There are a lot of shoes on the shelf; wear only the ones that fit. If you're extremely
confident, taking a loss doesn't bother you."
"I've learned many things from him, but perhaps the most significant is that it's not whether you're right or
wrong that's important, but how much money you make when you're right and how much you lose when
you're wrong. The few times that Soros has ever criticized me was when I was really right on a market and
didn't maximize the opportunity.
As an example, shortly after I had started working for Soros, I was very bearish on the dollar and put on a
large short position against the Deutsche mark. The position had started going in my favor, and I felt rather
proud of myself. Soros came into my office, and we talked about the trade.
"How big a position do you have?" he asked.
"One billion dollars," I answered.
"You call that a position?" he said dismissingly. He encouraged me to double my position. I did, and the
trade went dramatically further in our favor.
Soros has taught me that when you have tremendous conviction on a trade, you have to go for the
jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is
concerned, when you're right on something, you can't own enough.
Although I was not at Soros Management at the time, I've heard that prior to the Plaza Accord meeting in
the fall of 1985, other traders in the office had been piggybacking George and hence were long the yen going
into the meeting. When the yen opened 800 points higher on Monday morning, these traders couldn't believe
the size of their gains and anxiously started taking profits. Supposedly, George came bolting out of the door,
directing the other traders to stop selling the yen, telling them that he would assume their position. While
these other traders were congratulating themselves for having taken the biggest profit in their lives, Soros
was looking at the big picture: The government had just told him that the dollar was going to go down for the
next year, so why shouldn't he be a pig and buy more [yen]?
Soros is also the best loss taker I've ever seen. He doesn't care whether he wins or loses on a trade. If a
trade doesn't work, he's confident enough about his ability to win on other trades that he can easily walk
away from the position. There are a lot of shoes on the shelf; wear only the ones that fit. If you're extremely
confident, taking a loss doesn't bother you."
One of our better traders, RM, has advised me that what he believes makes him a great trader.
From a PM
I say my three biggest strenghts in trading are, speed (ability to get in and out quickly and adjust to the situation, as it might take only a second to make me react and fire), pattern recognition (very important for my quick scalping type trading style and ability to look at things and remember them in my mind), and ability to exit a bad trade (that's always a good thing, but something I have always been working on, and am getting good at). Still working on the balls part though.... Discipline, I believe I now have it depending on how I define discipline with regards to trading. I think my three strengths work well for my style, as I think discipline would be better with a longer term trading. I will see though, just figured I'd share that as I think RM is a great trader and quite a few others think so as well.
Good luck regardless!
From a PM
I say my three biggest strenghts in trading are, speed (ability to get in and out quickly and adjust to the situation, as it might take only a second to make me react and fire), pattern recognition (very important for my quick scalping type trading style and ability to look at things and remember them in my mind), and ability to exit a bad trade (that's always a good thing, but something I have always been working on, and am getting good at). Still working on the balls part though.... Discipline, I believe I now have it depending on how I define discipline with regards to trading. I think my three strengths work well for my style, as I think discipline would be better with a longer term trading. I will see though, just figured I'd share that as I think RM is a great trader and quite a few others think so as well.
Good luck regardless!
Yes, I simply send instructions to my broker every Friday.
For me Friday is payday. Whatever I have earned during the week is sent to my home office usually arriving on Tuesday of the following week.
For the poster worrying about purchasing power, well it just hasn't been a problem.
Steve
How can you not focus on the money when trading is mostly money management anyway?
Think of it in terms of risk management rather than money management (ie I'm willing to risk .10 to make .30+ rather than $100 to make $300)
how to make money?
Great advice!