Wednesday, March 3, 2010

The Need To Be Nimble As A Trader: Don't Believe Me? Ask One Of The World's Best Traders!

Interview With Paul Tudor Jones: One of the best traders to have ever lived.

"A rally in the stock index futures in the closing minutes of trading that day caused over a $1,000,000 loss in Jones' position. Yet, he was so composed and i didn't even realize the market had moved against him until i checked the closing prices later that day.

There was sufficient time to complete the interview at our first meeting. I returned about 2 weeks later. Two things were notable about this second meeting. First, whereas he had been strongly bearish and heavily short the stock market at the time of our first conversation, Jones' short term opinion on the stock market had shifted to bullish in interim. The failure of the stock market to follow thru to the downside at the price and time he had anticipated convinced him that the market was headed higher for the short term.

"This market is sold out", he emphasized at our second meeting. This 180 degree shift in opinion within a short time span exemplified the extreme flexibility that underlies Jones' trading success. He not only abandoned his original position, but was willing to join the other side once the evidence indicated his initial projection was wrong."

Market Wizards, Interview With Top Traders

by Jack Schwager

Guys, this is why i am constantly flip flopping back and forth in my market projections in order to adapt to constantly changing market conditions. Many traders are ALWAYS bullish or constantly bearish. It's almost ingrained. As a result, they are right on occasions and they will make money when the market eventually heads in their direction BUT they end up losing it all and then some once the market reverses. This is the result of failure to adapt to a changing tape. As a trader my job is not to be bearish to bullish, my job is to quickly adjust my trades in favor of what is working and the order flow of least resistance. The need to 'be right' to satisfy my ego is completely irrelevant to me, all i care about is making money consistently.

This should be our job as traders, period.

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