Sharing insights from a podcast featuring Jerry Parker on X, one of the original Turtle Traders, Kamath highlights key lessons on surviving in the markets.
In all my time as a trader and a broker, I’ve interacted with hundreds of successful traders, both large and small. The one common element to their success and longevity is risk management. This has become all the more important in markets like these when fear takes over and…
— Nithin Kamath (@Nithin0dha) March 17, 2025
‘Live to play another day’
Parker recalls a crucial trading rule: “When you have a drawdown, you reduce your positions twice as fast as the drawdown.” If you’re down 10%, cut your positions by 20%. “That one rule always works,” he says. “It keeps you from losing too much and lets you live to play another day.”
‘Cut losers, let winners ride’
Traders often get it backwards — we hold on to losses, hoping for a turnaround, but exit winning trades too soon, fearing they’ll shrink. Parker puts it simply: “When you have a loss, you’re hopeful it will turn into a winner, but you should be fearful it will get bigger. And when you have a big profit, you’re fearful it will shrink, but you should be hopeful it turns into a huge winner.”
The biggest mistakes? Over-trading and not following the system
For Parker, the biggest trading pitfalls are self-inflicted: “Over-trading and not following your system.” He recounts asking Richard Dennis, the man behind the Turtle Trading experiment, about the most common trader mistakes. Dennis had a blunt response: “Oh, over-trading and not following your system.”
Kamath echoes the sentiment: “Markets are unpredictable, but discipline is in our control. The best traders know when to step back, stick to their rules, and not let emotions dictate their trades.”
Whether you’re a novice or a seasoned trader, the lesson is clear — control risk, trust your system, and live to trade another day.
(Edited by : Shoma Bhattacharjee)
First Published: Mar 17, 2025 6:24 PM IST
