The Hollywood celebrities of the trading world. Famous traders have gripped our attention and stolen our focus with their clever techniques, huge wins, and brilliant planning. Movies like Wolf of Wall Street which portray devilishly successful Jordan Belfort have fueled our desire to learn more. So what are the most famous traders and how have they achieved success?
Like most things in life, trading has no single success formula. It requires appropriate reactions to the markets and continuous strategy refinement. Many traders have become consistently profitable through constant learning and solid discipline. Here are some of the famous ones.
With the help of his associates at his Quantum Investment Fund, Soros noticed that the pound was fundamentally weak in the time leading up to the 1992 Black Wednesday currency crisis. He built a short position on US$10 billion worth of pounds and made a $1 billion profit during Black Wednesday.
Soros is the current Chairman of Soros Fund Management, one of the most successful hedge fund firms in the industry. He has authored over 20 books on finance and investing and is currently one of the 30 wealthiest people in the world.
George Soros trading wisdom: “Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.”
Key takeaway: Trading requires flexibility. You should let market movements and participants dictate your trades.
Up until 2007, John Paulson was relatively unknown on Wall Street. However, that year he foresaw an asset bubble in the real estate market and bet against the market in what was praised by some as the “greatest trade ever.” Paulson made a reported $15 billion, pocketed a $3.7 billion profit, and became a prominent trader.
He has been called the “Man who made one of the biggest fortunes in Wall Street history” and “One of the most prominent names in high finance.” Today, Paulson heads Paulson & Co., a New York-based investment management firm which he founded in 1994.
John Paulson trading wisdom: “No strategy is correct all of the time”
Key takeaway: Regardless of how good your strategy is and how much you learn about the markets; you will never win with each trade you place. Losing is part of the process.
With the help of a friend, Steven Cohen opened a brokerage account while he was at the University of Pennsylvania with $1000 that was supposedly for his tuition.
At age 21, Cohen got a junior trader job on Wall Street in the options department at Gruntal & Co. where he made $8,000 on his first day. In six years, Cohen was making around $100,000 in daily profits and eventually, he managed a team of six traders and a $75 million portfolio.
In 1992, Cohen started S.A.C Capital Partners with his own $20 million. S.A.C Capital was one of the most successful hedge funds ever and Cohen was even dubbed the “hedge fund king” in a 2006 Wall Street Journal article. In 2013, Cohen was charged with failing to prevent insider trading in S.A.C, but he has made a comeback. Today, he is Chairman, CEO, and President of Point72 Asset Management, a $13 billion hedge fund.
Steven Cohen trading wisdom:
I always tell my traders that they would’ve loved the 1990s because it was a fairly easy time to make money.
Key takeaway: 2019 is a competitive time for traders. There are more market participants and more announcements on social media and television. It’s essential to choose the right broker to help you progress.
Paul Tudor Jones
The founder of Tudor Investment Corporation, a $12 billion hedge fund and private asset management company, Paul Tudor Jones made his fortune shorting the 1987 stock market crash.
Jones was able to spot a significant over-valuation in stocks, and two weeks before the 1987 Black Monday, he began trading against the market aggressively. On Black Monday, he tripled his capital from his short positions and made $100 million in profit. Jones is currently managing his hedge fund.
Paul Tudor Jones trading wisdom: “Where you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt.”
Key takeaway: There are many things you can’t control as a trader, but you can control how much you can potentially lose. You shouldn’t dwell on past mistakes and it’s essential to know when to enter and exit trades and use risk protection tools.
These famous traders have undoubtedly shown that success in the markets is possible. You just need the right tools, astuteness, risk control, and lots of discipline. Which famous trader do you spire to be like? Share the article with your thoughts.