"Survival is More Important than Profit"... Legendary Trader Peter Brandt Shares Survival Principles After 46 Years
[By Myungjeong Seon, Block Media] Veteran trader Peter Brandt, who has been active in the futures market for 46 years, emphasized that the key to successful trading is not high returns but thorough risk management and realistic expectations as he reflected on his investment life.
On the 26th (local time), Brandt stated through his X (formerly Twitter), "I have been making a living from futures trading since I was 29, and I will be 80 next year. The only reason I still trade in the market is that I love trading."
He added, "Many people only look for flashy returns, but a true trader must first learn how to handle losses."
"I Blew Countless Accounts"... First Success Found After Five Years
Brandt recalled that he was not a successful investor from the start.
Before being promoted at an advertising company in 1975, he left his stable job to start a new life at the Chicago Board of Trade (CBOT). However, he revealed that he blew countless accounts during the initial years.
"Some accounts disappeared in an instant, while others gave hope but eventually collapsed slowly with losses," he said, adding, "It took about five years after my first trade to make a meaningful profit."
The turning point came in 1978 when he encountered the classic technical analysis book 'Edwards & Magee.' He gained a framework for understanding price movements and began trading using classical chart patterns.
Brandt stated, "Trading is ultimately a process of constantly solving problems," and noted, "Only those who can maintain a breakeven point and continue to learn will find opportunities for success."
In 1980, he made significant profits and established his own trading company, 'Factor Research and Trading,' the following year. Over the next 46 years, he recorded losses four times, with the last loss year being 2013.
"Managing Volatility is More Important than Returns"
Brandt explained that his investment philosophy has changed significantly over time.
Since returning to the market in 2006, he has drastically revised his risk management approach to fit the computer-based trading environment, and he restructured his risk management principles again after the losses in 2013.
He emphasized that the most important indicator he has focused on in the last decade is not return on investment but minimizing asset volatility.
"Since the 1980s, I believed that if I focused on what I can control, profits would naturally follow," he said, adding, "In fact, the months I recorded losses over the past decade were few and far between."
He pointed out that the dream of individual investors to turn $10,000 into $1 million in a short period is unrealistic.
"I have achieved more than that, but it is the result of over 50 years from the 1970s to the 2020s," he said. "Expecting such returns in a few years is not realistic."
He mentioned that even the world's top hedge fund, Renaissance Technologies, has an average annual return of about 40-50%, and legendary investor Stanley Druckenmiller has also recorded an average annual return in the 40% range over a long period, advising caution against excessive expectations.
"Price Tells Everything... Cut Losses Quickly, Let Profits Run Long"
Brandt identified loss management and principled trading as the most important virtues for young investors.
"The probability of surviving as a full-time trader is only about 3 out of 1,000," he said, adding, "The first 4-5 years should be seen as a period of learning how to manage losses, not making money."
He further advised, "Do not expose more than 1% of your total assets to risk in a single trade, and do not obsess over short-term trading. Training to hold positions for more than a few days is also necessary."
In particular, he cautioned against blindly trusting those who boast of large profits or claim to predict market directions on social media, emphasizing that trading is a process of solving mathematical problems and that price is the most important factor in the market. "All information is already reflected in the price," he stressed.
Brandt also shared advice he frequently heard from senior traders of the World War II generation during his time at the Chicago Board of Trade.
He said, "The common teaching they left was, 'Cut losses as quickly as possible and let profits run as long as possible.' Only the structure of small losses and large profits can survive in the long term."
Brandt concluded, "The reason I continue to trade is that I still love the market," and expressed his desire to continue sharing the lessons he has learned from his lifelong experience as a trader in the market.
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