But you have been very successful for years. Aren't you more confident now than you were
before?
I am more scared now than I was at any point since I began trading, because I recognize how ephemeral
success can be in this business. I know that to be successful, I have to be frightened. My biggest hits have always
come after I have had a great period and I started to think that I knew something.
My impression is that you often implement positions near market turns. Sometimes your precision
has been uncanny. What is it about your decision-making process that allows you to get in so close to the
turns?
I have very strong views of the long-ran direction of all markets. I also have a very short-term horizon for
pain. As a result, frequently, I may try repeated trades from the long side over a period of weeks in a market which
continues to move lower.
Is it a matter of doing a series of probes until you finally hit it?
Exactly. I consider myself a premier market opportunist. That means I develop an idea on the market and
pursue it from a very-low-risk standpoint until I have repeatedly been proven wrong, or until I change my viewpoint.
In other words, it makes a better story to say, "Paul Jones buys the T-bond market 2 ticks from
the low," rather than, "On his fifth try, Paul Jones buys the T-bond market 2 ticks from its low."
I think that is certainly part of it. The other part is that I have always been a swing trader, meaning that I
believe the very best money is to be made at the market turns. Everyone says you get killed trying to pick tops and
bottoms and you make all the money by catching the trends in the middle. Well, for twelve years, I have often been
missing the meat in the middle, but I have caught a lot of bottoms and tops.
If you are a trend follower trying to catch the profits in the middle of a move, you have to use very wide
stops. I'm not comfortable doing that. Also, markets trend only about 15 percent of the time; the rest of the time
they move sideways.
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