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Born in 1960, Nassim Nicholas Taleb is a Lebanese-American mathematical statistician, author, risk analyst, and options trader. His work focuses on problems of uncertainty, randomness, and probability. He created the risk-hedging technique 'Tail risk hedging' or 'Black swan protection' that aggregates portfolio exposure in order to hedge against extreme market volatility. According to the Sunday Times, his 2007 book 'The Black Swan' is one of the twelve most influential books since World War II.

 

NASSIM NICHOLAS TALEB TRADING TIPS

■ Knowledge is in dealing with what we do not know

Knowledge and discovery are not so much in dealing with what we know, as in dealing with what we do not know.

  • We are trained to take advantage of the information that is lying in front of our eyes, ignoring the information that we do not see

 

■ What characterizes real speculators like Soros from the rest

What characterizes real speculators like Soros from the rest is that their activities are devoid of path dependence. They are totally free from their past actions. Every day is a clean slate.

  • My lesson from Soros is to start every meeting at my trading boutique by convincing everyone that we are a bunch of idiots who know nothing and are mistake-prone but happen to be endowed with the rare privilege of knowing it.
  • George Soros, when making a financial bet, keeps looking for instances that would prove his initial theory wrong.

 

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Linda Bradford RaschkeBorn 1959, Linda Bradford Raschke is an American trader, operating mostly as a futures trader. Linda started her trading career in 1981 making markets in options. Later, she became a registered CTA (Commodity Trading Advisor) and founded LBR Asset Management.

 

LINDA BRADFORD RASCHKE TRADING TIPS

■ The ability to perceive patterns in the market

I believe my most important skill is an ability to perceive patterns in the market. I think this aptitude for pattern recognition is probably related to my heavy involvement with music.

 

■ Be contrarian to the panic

Some of the best trades come when everyone gets very panicky. The crowd can often act very stupidly in the markets. You can picture price fluctuations around an equilibrium level as a rubber band being stretched... if it gets pulled too far, eventually it will snap back. As a short-term trader, I try to wait until the rubber band is stretched to its extreme point.

 

■ The accuracy of a prediction drops off dramatically, the more distant the forecast time

I believe that only short-term price swings can be predicted with any precision. The accuracy of a prediction drops off dramatically, the more distant the forecast time. I'm a strong believer in chaos theory.

 

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Victor Sperandeo is an American commodity and derivatives trader, known as “Trader Vic”..Born in 1945, Victor Sperandeo is an American commodity and derivatives trader, known as “Trader Vic”. Sperandeo traded, particularly in the energy and metals sectors. He is the CEO of Alpha Financial Technologies, LLC (AFT). It is said that until 1990, he had 18 profitable years in a row with an average return of 72%. Victor Sperandeo takes a trade only when the odds are in his favor. For example, he believes that a typical bullish swing on the Dow Jones Industrial is 20%. After the Dow has performed 20% the odds for further continuation are diminishing.

 

VICTOR SPERANDEO TRADING TIPS

■ Knowing the stage of the market matters the most

Trading the market without knowing what stage it is in is like selling life insurance to twenty-year-olds and eighty-year-olds at the same premium.

 

■ You have to know when the odds are in your favor

Gambling involves taking a risk when the odds are against you. For example, betting on a lottery or playing a slot machine are forms of gambling. I think successful trading, or poker playing for that matter, involves speculating rather than gambling. Successful speculation implies taking risks when the odds are in your favor. Just like in poker, where you have to know which hands to bet on, in trading, you have to know when the odds are in your favor.

 

■ The two-hundred-day moving average (200 MA)

In the stock market, the one indicator I give the greatest weight is the two-hundred-day moving average (200 MA).

 

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Peter LynchBorn in 1944, Peter Lynch is a legendary equity trader, author, and mutual fund manager. Between 1977 and 1990, he averaged a 29.2% annual return working for the Magellan Fund at Fidelity Investments.

 

PETER LYNCH TRADING TIPS

■ Discipline yourself to ignore your feelings. Stand by your position as long as the fundamental story hasn’t changed

The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn’t changed.

  • There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of the newscasters. Sell a stock because the company's fundamentals deteriorate, not because the sky is falling.
  • Good information is useless without the willpower.

 

■ Be contrarian to the herd

Over the past three decades, the stock market has come to be dominated by a herd of professional investors. Contrary to popular belief, this makes it easier for the amateur investor. You can beat the market by ignoring the herd.

  • Dumb money is only dumb when it listens to the smart money.
  • Small investors tend to be pessimistic and optimistic at precisely the wrong times.

 

■ When to put your money in the bank

If you can't find any companies that you think are attractive, put your money in the bank until you discover some.

 

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ANDREW KRIEGERAndy Krieger is known as one of the most aggressive currency traders worldwide, and the conqueror of the New Zeeland dollar. In 1986, he joined Bankers Trust where he made the legendary short trade against the New Zealand dollar. Later, he worked for George Soros. In 1992, he published the book: “The Money Bazaar: Inside the Trillion-Dollar World of Currency Trading”.

 

ANDREW KRIEGER TIPS

■ The key steps to effectively analyze a currency pair (by Imre Gams)

When I analyze a currency pair... I look at everything... I look at all these things in both countries of the currency pair:

(1) From the political situation in the country to the monetary policy of the central bank, to the growth rates in the economy, to the demographics, and so on.

(2) I don’t think I’ve ever taken a trade in a currency without first looking at everything from stock markets to bond markets to relative interest rates. All these things go into my equation.

(3) Then I try to figure out what’s priced into the market. In other words, what does the market expect? Does the market expect certain types of data? Does the market expect certain growth rates? Does it expect certain outcomes in elections?

(4) But if I know what’s expected, I get important information… because when economic or political data is released, I can watch the market’s reaction. That reaction tells me a lot about how the market is positioned.

(5) Once I have that information, I can study the technical factors, which give me still more information.

So it’s a multi-tiered, complex process.

 

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He is known for his quantitative techniques, using algorithms and sophisticated models to trade market inefficiencies...Born in 1938, James Harris Simons is an American mathematician and a billionaire hedge fund manager. He specializes in statistical analyses and systematic trading and he is known as the 'Quant King'. His fund, Renaissance Technologies, is implementing quantitative techniques, using algorithms and sophisticated models to trade market inefficiencies. As for 2019, and according to Forbes, his net worth was estimated to be $23 billion.

 

JAMES SIMONS TRADING TIPS

■ Looking for anomalous patterns

We search through historical data looking for anomalous patterns that we would not expect to occur at random. Our scheme is to analyze data and markets to test for statistical significance and consistency over time. Once we find one, we test it for statistical significance and consistency over time. After we determine its validity, we ask, ‘Does this correspond to some aspect of behavior that seems reasonable?’

 

■ Three criteria when selecting assets

We have three criteria: If it's publicly traded, liquid and amenable to modeling, we trade it

 

■ Patterns are not completely random

Patterns of price movement are not random. However, they're close enough to random