What Makes a Successful Hedge Fund Trader?

Two elements distinguish successful traders from those who struggle at hedge funds, Todd Finegold ’04, managing director at Maverick Capital, told students: creativity and conviction.

April 14, 2014

While those two qualities may sound simple or obvious, Finegold said, speaking on April 2 as part of the Colloquium on Business and Society, they are often overlooked in practice.

Conviction is important because every day something goes against you and if you don’t have it for the right reasons, you’ll end up struggling and always chasing your tail.

Creativity, as Finegold described it, includes understanding the opportunities that may arise out of a struggling economy, where at least some companies stand to benefit.

Traders also need a “stomach for risk”—they can’t lose their confidence if a few deals don’t pay off in the short-term. “You need to know when you’re wrong and the reasons for when you’re wrong,” Finegold said. “Conviction is important because every day something goes against you and if you don’t have it for the right reasons, you’ll end up struggling and always chasing your tail.”

The best traders have a high degree of independence, doing extensive research and understanding how different industries interact, he said. That creates confidence, which in turn leads to better, more consistent investment decisions.

“You have to be able to filter through what’s important and what does and doesn’t make sense,” Finegold said. “If you are doing independent work, thinking about how positions and how things interact, you’re probably investing in places where everyone else isn’t.”

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Matthew O'Rourke

Senior Communications Writer