I was thinking….when it comes to Soros, PTJ, and all the other heavyweight traders and fund managers…..back in their prime…..what sort of Daily Habits do you think they did to understand the markets and come up with their ideas for placing trades? Do you think they formally put it down on paper or computer documents what the markets did during the day like we do? Or do you think they just quickly were able to do it all in their head? I think back to the PTJ Trader video where it showed him verbalizing his ading rtideas…. I didn’t see anything he was doing on a daily basis as far as going thru all the headlines, reviewing many articles, seeing what happened during each economic data release, writing up daily trading plans, etc…..maybe by that time he had just become proficient enough to know it all subconsciously to where he did not need to do it in a recording kind of way? Just wondering ….at some point do you feel you will get to a stage where you will eventually one day perhaps not need to do the daily habits in a “formal” kind of way and just intinctively know what you need to know to place trades?? Not saying you wouldn’t need to read the news articles and headlines….I realize that is crucial and all the great traders do that.
I realize now they probably have other managers and traders presenting them ideas for how to allocate their hedge fund monies. I’m just curious how the big-time traders accomplished all their daily habits back in the day when they were still “traders” and learning to put forth winning trade ideas….compared to what they do now.
There is no way I can possibly know with 100% accuracy what their daily habits were. Even if I got a chance to speak to them, many of them may struggle to explain in simple terms what it is that they do. There are some great traders out there, but some of them can’t explain what they do. They can’t teach what they do. They may subconsciously know and understand, but they just struggle to put it into clear words.
I think the desks of many fund managers can be filled with all sorts of papers and documents. I have seen pictures of Soros’s desk and Steinhardt’s desk and they were filled with stacks of papers and documents in many places. You can get a good idea by properly researching and interpreting articles, books, biographies, autobiographies, videos, and pictures of past top traders.
For example in Marty Schwartz book Pit Bull: Lessons from Wall Street’s Champion Day Trader he describes “Porky’s” office. Porky was a pseudonym he gave for Michael Steinhardt I believe. The description he gave of Steinhardt’s office was:
Walking into Porky’s office was like walking into the showroom at Circuit City. The place was packed with screens, Telerates, Quotrons, faxes, phones, copiers, and a dozen other gizmos… custom leather swivel armchair… the chair was set behind a ponderous mahogany desk that was as big as a lunch counter and had just as much food spread on it.
I personally have many different things on my desk from post it notes with quotes and information, to books scattered, to my scenario sheets, to my daily habits, a calculator, etc. So everyone sets up their desk and office space differently. You will find what works for you and develop your own unique style.
Other people like Soros wrote a whole book on his philosophy. But even then he spent a lot of time explaining his philosophy which I do not believe is directly applicable to trading. In The Alchemy of Finance he explains his interpretation of events and information flow and gives you a very nice glimpse of his portfolio and market positioning. And that part is very, very valuable information. However, he also goes on and rambles a lot about his reflexivity, etc. It’s the job of the trader when they read something, to find out the most important information that is applicable to making money. The most important information that can help you form a powerful trading philosophy. Then discard all the rest. That is what I tried to do with the mastery course. I took all the strategies, quotes and information that I deemed important, adding in my own market beliefs and presented it to you.
In the Hedge Fund Market Wizards book there is a description of Soros that is enlightening:
George Soros has the least regret of anyone I have ever met. Even though he will sometimes play up to his public image as a guru who knows what is going on, it is no sense what he does as a money manager. He has no emotional attachment to an idea. When a trade is wrong, he will just cut it, move on, and do something else. I remember one time he had this huge FX position. He made something like $250 million on it in one day. He was quoted in the financial press talking about the position. It sounded like a major strategic view he had. Then the market went the other way, and the position just disappeared. It was gone. He didn’t like the price action, so he got out.
It seems he had on a multi billion dollar currency position, and the currency must of went in his favor by 3-5% or so, netting him $250 million in paper profits. Then he didn’t like the price action. Perhaps the price was retracing too much, or he interpreted some information flow and didn’t like how the market was responding to the news, or thought about the expectations and battle of scenarios, etc, and then decided to just get out of the trade. So sometimes that is what is weird about top traders and investors. In public they can philosophize and pontificate about things, but when it comes down to actual trading and investing, they can do something different and turn on a dime if they believe it is the right thing to do.
Just because the top traders may not come out and tell you exactly what they do, doesn’t mean you can’t form a very good view of what they do. You absolutely can. You can do it by researching articles about them and various things they have said. Almost every top trader gives some marvelous trading wisdom, and some bullshit or irrelevant information. It is your job to have a strong trading philosophy and interpretation advantage so you can cut through the B.S. to know what information matters and focus on it.
For example, when I was researching Paul Tudor Jones strategies and trading tactics during 1987, PTJ talks about how he used Elliot waves, etc. In my opinion, Elliot Waves are B.S. I don’t think I ever used them and don’t plan to try anytime soon. Whether PTJ used them or not to great effect, I don’t particularly care because I have developed my own trading philosophy and strategies that I believe work great and fit my personality. I have my own methods for determining when a big move is coming with my daily habits, and news interpretation and information flow and scenario approach. So that part of PTJ’s comments I may disregard.
That is what human beings do all day long, every day of their lives. What they believe in they typically add to their storehouse of information and add to their philosophy. What they don’t believe or deem irrelevant, they just disregard it.
So PTJ has given some wonderful pieces of advice, such as:
I really don’t care about the mistake I made three seconds ago in the market. What I care about is what I am going to do from the next moment on.
What a great quote on forgiving yourself and focusing on the current market moment!
PTJ also said:
The only relevant question is whether you are bullish or bearish on the position that day. Always think of your entry as last night’s close.
That is a wonderful quote for engaging in short term tactical trading to capture the intraday volatility and ODVE inefficiencies. It would have to be modified slightly for the Global Macro moves, but it is great advice for the short term tactical trader.
George Soros once said that he thinks of himself as “the world’s highest-paid critic” in the book Soros: The World’s Most Influential Investor:
I am a critic of the processes. I am not an entrepreneur who builds businesses. I am an investor who judges them. My function in the financial markets is a critic, and my critical judgments are expressed by my decisions to buy and sell.
That is how I partially think of my job as a trader. I am a critic of the information flow, of myself, and of other traders. My job is to interpret the information flow properly. I criticize myself for any mistakes or missed opportunities, but can also forgive myself. Then when I read information or articles or videos or conversations of other top traders, I critique them and find out what information is important and what is just fluff. I critique other people’s explanations for why the market moved, and it is my job to identify which reasoning is true and what is not true. The pursuit of truth through being a critic.
I definitely think you can get to a point where you may become so highly skilled that you may not need to do the daily habits in a formal way. I still like to do them because it presents a highly structured way to make sure I can get “into the zone.” I remember the days where I would wake up and didn’t know what to do. All the fear, anxiety, self doubt, etc. I saw it in other traders around me that were trying to succeed as well. I slowly figured out that the big reason most people failed was that they didn’t have a powerful trading plan, philosophy and daily habits. They lacked those things, so it led to fear and doubt because they would wake up every day and not know what to do or what to focus on. So I resolved to figure it out and develop a powerful and flexible trading strategies and philosophy and enshrine that into my daily habits.