Kovner is a discretionary macro trader who combines deep fundamental analysis with precise technical execution. His methodology has been described as one of the most intellectually rigorous in the trading world: 1. The Fundamental Foundation: Kovner starts with a thorough macro analysis — studying central bank policies, trade flows, political developments, and economic data across multiple countries. He looks for fundamental imbalances that the market hasn't fully priced in. He might study a particular currency pair for weeks before taking a position. 2. Technical Timing — The Entry Framework: Once Kovner identifies a fundamental opportunity, he waits for technical confirmation. He uses chart patterns, support/resistance levels, and volume analysis to time his entries. He never enters based on fundamentals alone — the chart must agree. 3. The Probe-and-Layer System: Kovner's position building follows a disciplined layering approach: - Layer 1 (Probe): A small initial position (10-20% of intended size) to "test" the market and his thesis - Layer 2 (Confirmation): Added when both fundamentals and technicals align and price moves in his favor - Layer 3 (Conviction): Full size position established once the trend is clearly established - Each layer has its own stop-loss at a technically meaningful level 4. The Stop-Loss Philosophy: Kovner's approach to stops is unique and critically important. He places stops not at arbitrary dollar levels, but at technically meaningful points — levels where the trade thesis would be invalidated. He says: "Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong." He adjusts position size so that if the stop is hit, the loss equals his predetermined risk amount. 5. Correlation Awareness: Kovner is acutely aware of hidden correlations. He monitors how his various positions interact and reduces exposure when multiple trades become correlated (e.g., he wouldn't be fully long in EUR/USD AND GBP/USD simultaneously).