Peter Brandt - 42% Annualized Return Over 5 Decades of Trading

 

In this episode of the Chat with Traders podcast Aaron Fifield interviews Peter Brandt. In the interview Aaron and Peter discuss Peters early years working at the Chicago Board of Trade and the development of his trading methodology.  Peter starting trading in 1975 and has almost 5 decades of trading experience.  Peter has achieved a compounding annual growth rate of approximately 42%. His best annual return was well over 600% and he’s had only 3 losing years with drawdowns of less than 8%!  Peter graduated with a journalism degree and he started his career in advertising. He was introduced to the Chicago Board of Trade through a friend. He was immediately drawn to trading. He liked the fact that traders worked mostly independently, weren’t caught up in meetings all day and they could easily calculate how successful their day was by looking at their trading results. Peter started working on the Board of Trade for Continental Grain Company and earned the capital he required to start trading for himself. He started trading the futures market in 1980 and blew up a few small accounts over a 4- or 5-year period before he became profitable.  Every time he blew up an account, he learned what worked and what didn’t work.  The biggest lesson he learned early in his trading career was the importance of risk management.  Peter describes his trading style as a classical chartist. It credits the books Technical Analysis of Stock Trends by Robert Edwards and John Magee and Technical Analysis and Stock Market Profits by Richard Schabacker as the main inspiration for his trading strategy. Although he makes minor tweaks to his trading strategy, he has not made any big changes to his approach for the last 30 years. He is a momentum trader and he trades breakouts. During the interview Peter goes into detail describing his trading strategy. Aaron and Peter have a detailed discussion of high frequency trading and the impact on the market. Peter notes that his win rate over time. During the interview Peter shares a near death sleep walking accident where he walked off a 17-foot ledge.

Trading advice from the Podcast that will make you a better trader:

  • You should enter every trade with the assumption that it will be a losing trade.
  • Your goal as a new trader is to survive until you become successful.
  • Trading can be a lonely endeavour. You need to find opportunities to become part of a larger trading community.
  • Learning to trade is really just an exercise in problem solving.
  • To be a successful trader you need to develop your own trading strategy. It is almost impossible to be successful trading someone else’s rules.
  • Learning to trade is like going to university except you don’t get to determine the tuition you are going to pay. The market decides what tuition you will pay.
  • It takes most people a minimum of 3-5 years to become successful in trading; about the same duration as a university education.
  • Chart reading is a craft that improves over time.
  • Peter trades off horizontal boundaries and is not comfortable trading off diagonal boundaries or trend lines.
  • The best trades tend to be profitable right from the start.
  • Most traders would be better off to trade one strategy that they are comfortable with rather than switching trading strategies based on what the market is doing.
  • Trading is a marathon not a sprint.
  • Marking money trading is not that difficult. It is keeping the money that you have made that is difficult.
  • Traders should focus more on risk management or money management than trade identification.
  • The main reason most traders are not successful is that they are afraid to lose. Trading is an endeavour where the best loser wins over the long term.
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