My Interview with US Successful Trader Peter L. BrandtThe Internet has truly made the world a smaller and a more accessible place.
In 2013, I stumbled across world-renown trader, author and owner Peter L.
Brandt, on Twitter and his blog. I sent him a request for him to
join one of the most elite South African trader groups on Skype.
We had some fantastic chats over the next couple of days. There are words
of wisdom that are far too essential to let them slip by.
I’ve collated some of the timeless lessons Peter L. Brandt shared with me.
I hope you enjoy the interview and find it useful for your trading career.
Timon: I’ve never met a trader who trades long time-frames on Forex and
commodities, do you believe technical charts can be used to predict market
movements?
Peter: I absolutely positively do NOT believe I can predict the markets. I
absolutely positively do NOT believe charts are predictive tools any more than
a MACD, COT, Moving Averages or anything else. My win rate is historically
around 38%, although I made some changes to the system in an attempt to
boost that to 45%. Generally, 100% of my profits come from 10% of my
trades. It is a matter of trying to keep the other 90% from being a net loss.
Timon: I agree with no one being able to predict the market movements,
however, I believe in probability predictions. If there is a breakout to the
upside, there is a higher probability for the market to continue moving in the
direction of the breakout. What is your take on when unfavourable markets
bring about a 15% or more drawdown on your portfolio?
Peter: Drawdowns come with the territory. The question to always ask for
discretionary traders is, whether their trading rules are out of sync with the
markets? If they are out of sync with their rules? or both? If I know the problem
are my rules being out of sync with the markets, I will never stop trading because I
cannot time my rules. I may cut back on the size during a losing period.
Timon: As my trading mentor and dear friend Igor Marinkovic
says, “Your biggest drawdown is still to come and so is your biggest
winning streak.” What are your thoughts on risk management principles?
Peter: As a general rule — very general rule — an excellent trader with a
great grasp of money management should have an average annual ROR that
is 1.5 to 2 times their worst drawdown, over the past three or five years. For
me, this is mandatory
Even daily patterns are made up of many hourly patterns that morphed, which
are made up of many 15-minute patterns that morphed etc... — I call it ‘Chart
Morphology’. The trick is to determine which patterns are real and which
patterns are more likely to morph.
Sometimes a market reveals itself by failing.
It is because of morphology that I seek patterns that are 10 to 12
weeks or longer. I’m also not worried about markets changing so drastically
that all conventional systems stop working. The reason is my belief that
markets are and have always been driven by fear, greed and money flows.
These things will always be the same.
Timon: Yes, that’s why I don’t believe in Holy Grail systems. I believe in
finding the system that suits your personality and risk profile. Along the way,
one should not feel scared about making mistakes, but be sure to avoid them
from being too costly. What would be your final feedback on trading in
general?
Peter: Sounds like you are well on your way to a long and profitable
career trading. Mistakes are the tuition charged by the markets for
learning. Unfortunately, the markets often decide the tuition rate, not
us. Hence, I only risk 0.5% per trade.
You have to develop your own style. I have never met another truly skilled trader who has copied his
or her style from another trader. This is true from a tactical standpoint,
but from a money management standpoint most skilled traders think
very much alike.
