Wisdom by Paul Tudor Jones on the “last third” of a market move & on skewed reward-risk

The first quote says a lot to me about the recent tenor of the market, whether it’s the start of a bull market end or a time based consolidation.

The second quote says a lot about what to do in all environments, and something I increasingly embrace and wish I adopted on a visceral level much earlier.

“There is no training — classroom or otherwise — that can prepare for trading the last third of a move, whether it’s the end of a bull market or the end of a bear market. There’s typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. The only way to learn how to trade during that last, exquisite third of a move is to do it, or, more precisely, live it.”

“I look for opportunities with tremendously skewed reward-risk opportunities. Don’t ever let them get into your pocket – that means there’s no reason to leverage substantially. There’s no reason to take substantial amounts of financial risk ever, because you should always be able to find something where you can skew the reward risk relationship so greatly in your favor that you can take a variety of small investments with great reward risk opportunities that should give you minimum draw down pain and maximum upside opportunities.”

h/t to http://socialleverage50.com/2013/06/25/13-insights-from-paul-tudor-jones/

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