-- Posted Thursday, 7 June 2012 | | Disqus
[My New England road trip brought me to the St. Johnsbury, Vermont home of an old friend, Neil Raphel. A marketing consultant with degrees in English literature and law, Neil worked for a while as president of the trading firm of Wall Street legend Victor Niederhoffer. In the guest commentary below, he summarizes the most important things he learned about trading from Victor. RA]
Rick asked me to fill in for a day, and I thought I’d give you some trading and life tips I learned from Victor Niederhoffer. Victor is, above all, a speculator. Like the infamous Jesse Lauriston Livermore, an early 20th century stock investor who made and lost several fortunes in Wall Street, Victor over the past 40 years has made spectacular gains in the market and suffered some devastating losses.
I had the good fortune to work for Victor in the mid-1980s, when he was at his trading pinnacle. At his best, Victor was a short-term trader who made money consistently in the commodities markets by charting the interrelationships of commodities.
Years later, after I had left, Victor had some setbacks when he changed his trading methods to accommodate a much larger public fund. But to my mind, Victor was a trading genius whose short-term results consistently disproved the “Random Walk” theory of the market. Year after year, Victor produced amazing results.
Ten Tips
I came to Victor as a trading novice. Here are ten tips from him that helped me learn the trading game:
• Study horse racing books. The odds against winning at a parimutuel racetrack are overwhelming. Yet some touts have systems that produce a profit (against all odds). Can you apply any of these horse racing principles to your trading?
• Write down trading prices (by hand). There were a ton of computers in Victor’s trading room. Yet Victor made me do price analysis by hand. He felt there was enormous virtue about getting close and comfortable with trading figures.
• All markets are related. Learn what a move in bonds does to gold. And to S&P futures or the Japanese yen. Don’t trade markets in isolation
• Only make a trade when the odds are at least 60% in your favor.
• Don’t take losses to heart. I lost $20,000 on a Friday, the first day I traded real money for Victor. I wiped out my trading account. After stewing over my losses all weekend, I offered to resign and refund my losses. Victor refused my resignation and put $20,000 back in my trading account.
• Don’t take wins to heart. I remember making a lot of money following (I thought) Victor’s instructions while he was away. When Victor returned, he was not impressed by the fact the firm made money. He told me that I had traded erroneously and was lucky to have survived my trades.
• Be a mentor. Victor was generous with his time and advice. Despite the fact that several employees exploited his generosity, Victor continued to help new traders.
• Get out when the trade is over. All trades have a beginning and end (based on time and price). Get out whether you’re winning or losing when the time or price has been met.
• Write down your moves. Learn from your mistakes.
• Learn concentration and game strategy from champions in other disciplines (such as ping-pong and checkers).
You can also learn great speculative lessons from Victor’s website, www.DailySpeculations.com. If you would like information about Rick’s proprietary trading system, the Hidden Pivot Method, click here. To receive a free trial subscription to his daily service, including 24/7 access to a chat room that draws traders from around the world, click here.
-- Posted Thursday, 7 June 2012 | Digg This Article
| Source: GoldSeek.com
