Key insights from legendary trader Peter Brandt’s discussion on trading psychology, risk management, and how markets have (and haven’t) changed over five decades.
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Veteran trader Peter Brandt, featured in Jack Schwager’s Unknown Market Wizards, shares hard-won wisdom from 50+ years in markets. This AlphaMind podcast discussion covers:
- Strong opinions, weakly held: Brandt emphasises the need for conviction in trade setups while remaining agile enough to reverse views when markets dictate. His Nikkei 225 pivot (from bullish to bearish) in early 2024 exemplifies this.
- Risk aversion ≠ loss aversion: “I don’t fear losses… but I respect risk deeply.” Brandt differentiates between accepting losses as part of trading versus reckless risk-taking that jeopardises longevity.
- The 3-4 year apprenticeship: New traders typically require 3-4 years to “pick up the scent” of their edge. Brandt blew multiple accounts in his early years before finding consistency.
- Process over prediction: “The magic isn’t in the trades you enter, but in how you manage them.” Meticulous routines and statistical understanding eventually outweigh trade selection.
- Markets change, human nature doesn’t: While technology has transformed execution, the psychological challenges (overconfidence, fear, greed) remain identical to Brandt’s 1970s floor-trading days.
Brandt’s trading evolution reflects broader market shifts:
Actionable insight: Traders should journal not just trades, but their decision processes – particularly instances where they changed views (like Brandt’s Nikkei reversal). This builds the “strong opinions, weakly held” muscle memory crucial for adapting to markets.
The full discussion (part 2 coming soon) explores floor-trading vs electronic markets, generational differences in trading approaches, and Brandt’s current market outlook.