Breaking It Down: Trade Like Trader Victor Sperandeo
Market Wizard, Legend, Compounding at 72%... let's talk about Trader Vic
'Success is not final, failure is not fatal: It is the courage to continue that counts.'
Learn how to do so below…
Let’s jump into Sperandeo's key principles, peppered with his own quotes that encapsulate decades of experience. From navigating market stages to mastering risk, his strategies offer a blueprint for traders seeking success in a dynamic financial world.
💹 PERFORMANCE FOCUS: Sperandeo's mantra is clear: 'Focus on loss avoidance.' With 18 winning years and a 72% average annual gain, he advocates, “The key to building wealth is to preserve capital and wait patiently for the right opportunity to make the extraordinary gains.”
🃏 POKER ROOTS: Drawing inspiration from poker, Sperandeo emphasizes, 'Successful trading, like poker, is about speculating, not gambling.' 🎲 Learn why strategic decision-making and risk management are key.
📊 MARKET STAGES: Sperandeo views market movements as having 'statistically significant life-expectancy profiles.' “Investing in the market without knowing what stage it is in is like selling life insurance to 20 year olds and 80 year olds at the same premium.”
📉 BOTTOMS AND DEFINITIONS: Recognize market bottoms with Sperandeo's insight: 'Market bottoms have telltale signs.' His success in 1974 reinforces the importance of recognizing these signals. “In the case of 1974,1 went long the world on December 6. That day proved to be the exact bottom of the market.” (Watch the interview to see why this was not as profitable as it could have been)
(I have been making short videos from our interviews. Please let me know if you would like to see more of these)
If you find this content valuable, please consider liking, sharing, and subscribing. Feel free to pass it along if you think it can benefit others.
❓ UNCERTAINTY AND INTELLIGENCE: Addressing uncertainty, Sperandeo notes, 'Whenever there's uncertainty, I get flat immediately.' Intelligence isn't everything; as he asserts, 'Making money has nothing to do with intelligence.'
🛑 RISK ANALYSIS: Sperandeo's approach is clear: 'Losses are always predetermined.' Emphasizing emotional discipline, he adds, 'Admitting mistakes is the key to walking away a winner.'
📚 TRAINING AND KNOWLEDGE: Reflecting on training traders, Sperandeo emphasizes, 'The key to trading success is emotional discipline.' Knowledge alone isn't sufficient; he notes, "I discovered that you can't train people how to trade by just imparting knowledge.”
DIETING AND TRADING: Analogizing trading to dieting, Sperandeo states, 'Most people know how to lose weight but lack emotional discipline.' Drawing parallels, he says, 'The single most important reason people lose money is not cutting losses short.'
📈 BUY AND HOLD MYTH: Dispel the myth with historical examples: 'Buying and holding doesn't guarantee profits.' Learn from history, as Sperandeo did: 'To build wealth, preserve capital and wait patiently for the right opportunity.'
🔍 CUTTING BACK AND TRADING OBJECTIVES: 'When doing things right, expand involvement; in a losing streak, cut back.' Sperandeo's trading hierarchy: capital preservation, consistent profitability, and superior returns. (Note: I will make a post on this specific subject by Trader Vic)
📉 TECHNICAL ANALYSIS: While valuing technical analysis, Sperandeo keeps it simple with a three-step process for trend changes. “I’ve made too much money trading on technical observations to dismiss technical analysis.”
TLDR? From my notes…
Trade with the Trend: The trend is your friend. Align your trades with the prevailing market direction for increased chances of success.
Use Stop Loss Orders Whenever Practical: Protect your capital. Set clear stop-loss orders to limit potential losses and manage risk.
When in Doubt, Get Out: Trust your instincts. If uncertainty clouds your judgment, exit the trade and reassess.
Be Patient, Never Overtrade: Patience pays off in trading. Avoid the temptation to overtrade and let the market come to you.
Let Your Profits Run, Cut Your Losses Short: Maximize gains by allowing profitable trades to flourish, while minimizing losses through timely cuts.
Never Let a Profit Turn Into a Loss: Secure your gains. Once you're in profit, consider adjusting your stop-loss to protect your earnings.
Buy Weakness, Sell Strength: Maintain a balanced approach. Be as willing to sell as you are to buy, adapting to market dynamics.
Be an Investor in Bull Markets, Speculator in Latter Stages: Tailor your strategy to market cycles. Invest wisely in early bull markets and adopt a more speculative approach in later stages.
Never Average a Loss, Don’t Add to a Losing Position: Resist the urge to average down. If a position is losing, cut losses rather than increasing exposure.
Never Buy Just Because the Price is Low, Never Sell Just Because the Price is High: Focus on value and fundamentals. Price alone should not dictate your decisions.
Lately, I've received questions about my trading strategy, and I'll be sharing insights soon. I want to emphasize that I'm more than just a writer here; I'm actively engaged as a trader with my own fund who has drastically outperformed the market for years. Trader Vic’s methodology was one that really helped me. We'll delve deeper into this topic soon for those who weren't aware. Stay tuned!
Stay informed. Stay resilient. Against all odds.
Warm regards, Jason Perz
Against All Odds Research
Trader Vic--Methods of a Wall Street Master.
Trader Vic II--Principles of Professional Speculation (Wiley Trading)
New Market Wizards (second book)