“I am wrong 60% of the time. This means that my default emotional expectation on a trade should be that this [next] trade will be a loser.” ~ @PeterLBrandt
Peter Brandt loses on 60% or more of his trades. He’s run the numbers and his win-loss rate over 29 years is decidedly negative. End of story, right?
But wait… in 29 years, only three years have tallied a negative annual return — the worst of which was an almost 8% loss. Huh?
It gets better… over those 29 years in total, Peter’s average annual gain is nearly 42%. That’s a forty-two percent gain, on average, every year, for twenty-nine years — in spite of only winning on way-less-than half of his trades. Peter figures every $1,000 invested in his proprietary trading operation at inception in 1980 has since returned over $320,000 in profits. Mind-blowing!
Yet, as an affront to this incredible success by all measures, Peter humbly considers himself a glorified, low-level order executer:
“I view myself as simply the person who executes my trading plan. My job is to enter orders, to manage my order flow, to manage the risk I take on trades, and I’ll let the markets do what they do. I have no control over the markets.”
Ok, so how do we copy Peter’s strategy and follow in his footsteps to riches? Not so fast…
“Everybody has to find out what their sweet spot is, what approach to the market resonates with them and makes sense. Because I do believe that every successful trader will find his or her own path to trading. No two successful Traders that I’ve known (and I’ve known a lot over the course of my career) trade markets the same way. They each find their own way.”
Don’t be discouraged. While Peter says no two Traders trade alike (hint: there is no holy grail), he has observed several common traits in all successful Traders he’s come across that can be learned and internalized by anyone in their journey of self-discovery. And he also shares common “capital offenses” most failed traders commit that we must be aware of so we can avoid at all cost.
This episode of The Must Follow podcast examines Peter’s observations as well as his personal trading beliefs and track record as a futures and commodities Trader who has participated in markets in parts of FIVE DECADES. To say that he’s seen it all would be a severe understatement.
There is so much to learn from a market veteran like Peter Brandt and I’m pleased to share this one-hour conversation with you. Start here:
Peter Brandt was named as one of the 30 most influential persons in the world of finance by Barry Ritholtz’ web site, The Big Picture in 2011. And rightfully so. The 60 year old trader has immense experience in futures and proprietary trading.
Peter Brandt Performance
Peter Brandt is one of the best living traders. His performance is just outstanding and could be compared to trader legends such as Stanley Druckenmiller or George Soros.
Average annual compounded rate of return (based on IRS tax reporting) = 41.56%
Average annual compounded rate of return (based on VAMI calculations) = 77.8%
Growth of initial investment of each $1,000 (through 2009) = $334,817
Profitable years = 14
Unprofitable years = 4
Best year = +604.7%
Worst year = (8.4%)
Ratio – size of average profit in profitable years divided by size of average loss in unprofitable years = 7.6 to 1
Ratio – Total gains in profitable years divided by total losses in unprofitable years = 26.8 to 1
Most Recent Return – from June 2014 to end of 2014 – 45%+. That’s just for half an year!
Of course Peter Brandt’s performance has not come without difficult periods, trials and struggles. He has made every mistake he points to in his book and many more. The market is the best teacher.
Peter publishes a trading subscription service at: http://peterlbrandt.com/
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