Market Wizards: Bruce Kovner

Don't get caught in a situaiton in which you can lose a great deal of money for reasons you don't understand

You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.

[on how you're different from the average guy] I have the ability to imagine configuraitons of the world different from today and really believe it can happen. I can imagine that soybean prices can double or that the dollar can fall to 100 yen. Second, I stay rational and discipline under pressure.

One of the jobs of a good trader is to imagine alternative scenarios. I try to form many different mental pictures of what the world should be like and wait for one of them to be confirmed. You keep trying them on one at a time. Inevitably, most of theses pictures will turn out to be wrong---that is, only a few elements of the picture may prove correct.

To make money, you have to hold a position with conviction. That is very difficult when you are following someone else.

The general rule is: The less observed, the better the trade.

Undertrade, undertrade, undertrade. Whatever you think your position ought to be, cut it at least in half. My experience with novice traders is tha tthey trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks.

Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not a a point determined primarily by the maximum dollar amount you are willing to lose per contract.