Learning from Old Traders, not Bold Traders

I mentioned a few weeks ago that a major problem with books written on trading is that, in general, they are not written by successful traders.   Often, these books prove to me what doesn't work, which is moderately helpful, since this process will eventually lead to what does work.

However, if you want to cut to the chase, here is a suggestion:  study, learn from old traders.  The way I see it, if a trader has been trading for say, 25 years, he's doing something right.   Furthermore, old traders are more likely to have become successful through skill, rather than luck.   Anybody can put together an amazing one year track record (even me), but it's the truly skillful traders that deliver results decade over decade.

So, in this post, I've assembled some resources that I have found insightful from five old traders that I've personally learned a lot from:

1) Peter L. Brandt

Trading experience: 40 years
Website: Yes
Other:  Podcast, Podcast 2

2) William Eckhardt

Trading Experience: 40 years+
Website: Limited
Book: None, but profiled in The New Market Wizards

3) Larry Hite

 Trading Experience: 40 years+
Website: Limited
Book: None, but profiled in Market Wizards and Trend Following
Other:  Limited - YouTube Clip

4) Ed Seykota:

Trading Experience: 40 years+
Website: Yes
Book: Yes, but out of print;  profiled in Market Wizards
Other:  Limited - YouTube Clip

5) Nick Radge

Trading Experience: 29 years
Website:  Yes
Book:  Unholy Grails

Now, finally, here are some commonalities that I have identified amongst these five traders:

  • They have a strong emphasis on risk management.   All of these traders don't risk much more than 2% of their capital on each trade.   What happens if you don't follow this rule?   You'll blow up eventually, and you will not become an old trader.   

  • They all trade in the direction of the trend.  Even Peter Brandt, who technically is not a trend follower, does appear to trade in the direction of the trend most of the time, and is a self described "buyer of strength" and a buyer of "new 13 week highs". 

  • They don't forecast the market.   These five men have over 150 years of combined trading experience and they don't where the market is going next.   If they can't do it, how likely is that you can read a book on indicators, candlestick patterns, or go visit some blog out there that will "call" the market and base your success on that?