236: How to Profit and Protect in Any Market Conditions - with Tom Basso
May 23, 2024
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Tom Basso, a Market Wizard and $600 million fund manager, shares his strategies for profiting in any market conditions. Topics include extreme diversification, simple hedging strategies, using multiple indicators, common-sense trading decisions, and risk management. Learn how to protect your account in downturns while enjoying the ride!
Extreme diversification can boost portfolio growth, traditional diversification may not suffice.
Proper position sizing and risk management are crucial for long-term trading success.
Deep dives
Tom Baso's Journey in Trading and Retirement
Tom Baso shares his trading journey, starting like most traders with limited knowledge and years of persistence to eventually become profitable and managing $600 million before retiring in 2003. He reflects on how his motto 'enjoy the ride' led to the creation of a mentoring website to streamline answering common trading questions.
Position Sizing and Risk Management
Baso emphasizes the importance of appropriate position sizing, highlighting the need to balance risk exposure and portfolio diversification. He stresses the significance of sizing positions based on risk management, ensuring that each trade contributes positively to the portfolio's overall performance.
Longevity Tips for Traders
Baso identifies two key factors contributing to his longevity as a trader. Firstly, he focuses on managing bet size and portfolio risk, emphasizing the need for strategic position sizing. Secondly, he underscores the importance of self-awareness and discipline, key elements that have helped him navigate drawdowns and maintain a successful trading career.
Diversification Strategies and Common Sense Trading
Baso discusses the significance of diversification across different markets, assets, and trading approaches. He advocates for common sense trading, empowering traders to understand indicators, leverage trend following metrics like RSI and steer clear of volume indicators to focus on price movement.
Tom Basso is a Market Wizard with 5 decades of experience.
After taking 4 years to get to break-even, he eventually transformed himself into a $600 million fund manager.
In this discussion with Tom, we uncover some of the key strategies he uses to profit in almost any market, protect his account from market downturns, and all while enjoying the ride!
Here’s some of the key takeaways:
Why traditional diversification isn’t enough and how to deploy extreme diversification to grow your portfolio,
Tom’s simple yet powerful hedging strategies to protege your account in a downturn,
How to generate more consistent results by “filling the potholes”
The advantages of using multiple indicators in trading and which indicators Tom uses (and those he avoids),
How to simplify trading decisions using a common sense approach,
Plus risk management, position sizing, discipline, surviving long-term and much more.
Disclaimer:
Trading in the financial markets involves a substantial risk of loss. All content produced by Better System Trader is for informational or educational purposes only and does not constitute trading or investment advice.
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