Three More Things I learned from a Superstar Hedge Fund Trader

The video of the interiew can be found here

Last week I had a chance to explore some of the ideas in my interview with Superstar Hedge Fund trader Turney Duff, but there were so many good points that I did get a chance to address that I decided to do another column on our conversation.

Here are some key takeaways from our talk.

1. Have a network.

The best ideas always come out of conversation with other people. Trading tends to be a very solitary business, but if you form a group and create a network, your inventory of ideas will increase exponentially. Many people feel incredibly proprietary about their trade ideas, but the fact of the matter is that there is almost nothing you thought of that someone else has not. Markets are all about analyzing crowd behavior and in order to do that well you need to talk to other people. Turney had developed many relationships on Wall Street that opened him up to interesting and profitable trade ideas. As retail traders we don’t have access to such physical networks, but we can still create virtual ones on the Web. That’s why my favorite and most productive time of the day is when I host webinars on BK and engage in a free for all analysis of the market. Often our subs see ideas that I myself miss, or suggest improvement on strategies that I have not thought of. In trading, two heads are definitely better than one. Although trading can be seen as the ultimate competitive behavior, it is also a collaborative enterprise.

2.Bet on the wrong man

One of the most interesting ideas that came out of our talk was Turney’s stories about analysts who were consistently wrong. Instead of despising those guys, Turney turned them into gold by betting against their ideas. On Wall Street there are many gurus that have the golden touch in reverse (think of how much money you could have made better against Robert Prechter). Instead dismissing them -- seek those voices out and then do the exact opposite of what they recommend.

3.Be prepared and act on your thesis.

Turney would always come into the office and hour early that anyone else and absorb all of the overnight flow, so that when the markets opened he was well informed and ready for the day. I can’t tell you how many times I have seen traders make unnecessary trades simply because they weren’t fully informed and prepared.

But perhaps the most important takeway from Turney is that once you’ve done your research and come to your conclusions you must be prepared to act when the market moves your way. How many times have you decided on a support point or a breakout level but did not commit to the trade when those levels were hit, only to see the trade run away from you? Turney point is that you will never be as good a trader as when you are considering ideas in the calmness of your home -- away from the volatility and turmoil of the market. Letting the emotion of the moment to control you is always a bad idea. Be prepared, be informed and when the market gives you the set up -- don’t equivocate.

The video of the interiew can be found here

Boris Schlossberg

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