Paul Tudor Jones is widely regarded as one of the most successful traders of all time. He is a billionaire and the founder of the Tudor Investment Corporation and the Robin Hood Foundation.
During this current economic climate a number of people have been enamoured with the idea of making quick money by investing in a number of markets, whether they are stocks, foreign exchange (forex), crypto-currency, options, futures, or a whole host of other ways of generating money quickly.
“During the gold rush its a good time to be in the pick and shovel business” – Mark Twain
That insight by Mark Twain addresses a key part of where a number of speculators go wrong. An overwhelming number of people attempt to make money by ‘betting’ in markets that they know hardly anything about and yet attempt to outperform experts that spend their entire lives studying their fields of expertise.
Paul Tudor Jones was one such expert. In 1976 he began his career working with Eli Tullis, a famous trader at the time. Jones began working as a floor clerk, then he would study how the market worked in his spare time.
Later that year at age 24 Jones secured a job at the stock brokerage firm E. F. Hutton & Co. He brokered commodities and during his second year made $1 million in commissions. A commodity is a product such as cocoa, sugar, cotton, fruit, etc.
In 1979 Jones lost 65% of the value of his customers’ portfolio with a single trade on the cotton market. Tudor cited the reason for this mistake was from overtrading too many contracts at once. This event would have a significant impact on his perspective and he would create principles to make sure that he never made this mistake again.
“First of all, never play macho man with the market. Second, never overtrade.”
– Paul Tudor Jones
After learning from his mistakes, Tudor would become a better and more disciplined trader. In 1980 he became a floor trader on the New York Cotton Exchange, making millions over the next four years, with only one losing month.
“You learn more from your losses, than from your gains.” – Paul Tudor Jones
Jones would launch the Tudor Group in the 1980s and due to his successful performance he would attract investors including Eli Tullis who he had worked for earlier in his career.
One of the moments that solidified Jones’ reputation as one of the greatest traders in the world was his prediction that the United States stock market would crash in 1987. He did this with the help of his colleague Peter Borish who noticed the similarities between the preceding events of the 1929 stock market crash and what was happening during their current period of time. The documentary ‘Trader’ looks at the life and methodology of Paul Tudor Jones and highlights a number of the preceding events to October 19, 1987.
Paul Tudor Jones Trader Documentary
Another investor who would use stock market patterns from the past to help guide decisions on how to capitalise from past errors is the billionaire Ray Dalio, you can see his lessons on how the economy works here – http://www.anisometric-inc.com/one-of-the-best-ever-explanations-of-how-the-economy-works/
Jones would analyse the patterns of the 1929 stock market crash and see similarities between what was happening in 1987 then make his predictions on what the market would do at a certain point. To hear more about what he thought you can see his interview with Lloyd Blankfein from Goldman Sachs here – http://www.anisometric-inc.com/billionaire-paul-tudor-jones-talks-to-goldman-sachs-lloyd-blankfein/
“It is not that we had any unfair knowledge that other people didn’t have, it is just that we did our homework. People just don’t want to believe that anyone can break away from the crowd and rise above mediocrity.”
– Paul Tudor Jones
Jones would literally make hundreds of millions of dollars on that October day and he would go down in history as one of the biggest winners when the majority of others were losers at exactly the same moment.
“To some extent, to be a good trader, you have to be a contrarian.” – Paul Tudor Jones
An interesting thing happened after the exceptional victory, Jones reached such an emotional high after October 1987 that he found it difficult to maintain his high standards and started to lose money, he hired the personal development coach Tony Robbins to help him to build a success strategy where he could psychologically get himself back to the place where he would achieve his previous successes.
Jones reportedly pays Robbins $1 million a year to coach him and they email each other frequently to make sure that the strategy is implemented each day. Robbins was one of the first success coaches to breakthrough to become an international celebrity, he worked with a number of prominent figures to improve the quality of their lives. His teachers were Jim Rohn who was a personal development speaker who taught about prosperity, Richard Bandler who was a computer programmer and co-founder of the neuro-lingusitic programming (NLP) movement, as well as John Grinder the linguist who was another co-founder of NLP. To find out more about how to take control of your own psychology you can see more here – http://anisometric-inc.com/the-principle-of-control/
Robbins was able to take the field of personal development to a wider audience that Rohn, Bandler or Grinder could have done, the burning ambition of Robbins as well as the emergence of new technology would enable Robbins’ messages to spread throughout the entire world far more rapidly than ever before.
Paul Tudor Jones would work successfully with Robbins and he would grow the funds for his clients and now the Tudor Corporation manages over $6 billion. Tony Robbins explains how he worked with Paul Tudor Jones below.
Tony Robbins on how he worked with Paul Tudor Jones
Jones used the lessons from his own experience and those he gained while working with Tony Robbins to develop a robust philosophy of success that serves as a valuable tool for any investor or trader attempting to gather insights from one of the best of all time.
Paul Tudor Jones’ rules for successful trading
“The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge.”
“I don’t break it down trade by trade. My goal is to finish each day with more than I started.”
“I can always tell a rookie trader because he will ask me, “Are you short or long?” Whether I am long or short should have no bearing on his market opinion. Next he will ask “Where are you long from?” Who cares where I am long from.”
“I know that to be successful, I have to be frightened. My biggest hits have always come after I have had a great period and I started to think that I knew something.”
“Markets trend only about 15 percent of the time; the rest of the time they move sideways.”
“I never apologize to anybody, because I don’t get paid unless I win.”
“Eighty-five percent of my net worth is invested in my own funds, primarily because I believe that is the safest place in the world for it.”
“Intellectual capital will always trump financial capital.”
“The first thing I do is put my ear to the railroad tracks. Prices move first and fundamentals come second.”
“I don’t just use a price stop, I also use a time stop. If I think a market should break, and it doesn’t, I will often get out even if I am not losing any money.”
“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.”
“And then at the end of the day, the most important thing is how good are you at risk control. Ninety-percent of any great trader is going to be the risk control.”
“Where you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt.” – Paul Tudor Jones
“Don’t focus on making money.”
“If you have a losing position that is making you uncomfortable, get out.”
“Increase your volume when you are trading well.”
“Decrease your trading volume when you are trading poorly.”
“Never trade in situations where you don’t have control.”
“Don’t worry about where you got into a position.”
“Focus on protecting what you have.”
“Always question yourself and your ability.”
Trader: Paul Tudor Jones
Coach: Tony Robbins
Trader documentary: PBS