April 18, 2023

The history of the financial world is filled with all sorts of events. And there are specific people behind every success or failure. Among them is Paul TuDor Jones, an American trader, financier and founder of one of the most successful hedge funds in the world: Tudor Investment Corporation.

The beginning of a Long Journey

Paul Tudor Jones (PTJ) was born on September 28, 1954, in Memphis, Tennessee, USA. He graduated from elementary school and university there, and later received an economics degree from the University of Virginia. He started his career in the financial industry in 1976 when he joined E.F. Hutton in New York, where he first worked as a clerk, but soon, having shown his talent, rose to be a stock market analyst and quickly became one of the company's most successful traders. During his several years at E.F. Hutton Tu Jones gained valuable experience in analyzing company financial statements and stock selection before moving to Commodities Corporation (CC), which traded in futures markets.

How Do You Make Trading Profitable? Paul Tudor Jones, King of Wall Street's 10 Rules1

In 1980, at the age of 26, he decided to start his own hedge fund and founded Tudor Investment Corporation. The young financier started with a small capital, investing all the money he had earned by that time. Along the way, he persuaded friends and acquaintances, attracted funds from clients and, thanks to his talent and ability to take risks, quickly expanded his fund. At the same time, PTJ entered Harvard Business School, but soon realized that what they teach at this school is not at all the knowledge that he wants to receive.

Tu Jones abandoned the idea of further education and devoted all his time to practical trading, in which he was helped by his uncle, who had been in the stock market all his life. 

The first 5 years of Tudor Investment Corporation had an annual profitability of over 100%. Paul Tudor Jones achieved his first big success in 1985 when he made over $20 million in grain trading. The next year, 1986, ended with a 92.2% return for the fund, and was regarded by PTJ as a poor financial year.

The trader became famous among the general public after October 19, 1987. On this day, Black Monday, one of the most significant crashes in the US stock market occurred, which caused stock indices to fall on all continents. Having anticipated this development in advance, Tudor Jones was able to make the most of the situation, making $100 million and tripling his capital. And exactly one year later, every dollar invested in Tudor Investment brought investors 17 times more. Another successful year for the financier was 1990, when Tu Jones managed to make big profits when the Japanese market fell.

Success Factors

One of Tu Jones's key successes was his ability to conduct market analysis, on the basis of which he predicted market movements and made effective decisions about buying and selling assets. His approach included both technical and fundamental analysis and analysis of the market situation.

PTJ was also known for his ability to calculate risk and use risk management strategies to protect his investments. He used a variety of methods to mitigate potential losses, including using stop losses, portfolio diversification, and setting the maximum position size allowed on each trade.

Another factor that contributed to Tu Jones' success was his ability to adapt to changing market conditions. He quickly reacted to changes in the economic and political situation, as well as changes in the technical parameters of the market, which allowed him to adapt his trading strategies and keep his hedge fund profitable.

Trading Strategies

The strategies that Tu Jones used could change depending on the market situation. Some of them were based on technical or fundamental analysis, others were based on statistical analysis and mathematical models, and still others combined everything together.

One of the most famous strategies used by Tu Jones was "short-term trading", where assets were bought and sold within a short time, usually no more than a few days. This strategy was based on the analysis of the technical parameters of the market and was profitable due to high liquidity and fast capital turnover.

Another strategy used by Tu Jones was the "macro trading" strategy. It was to analyze macroeconomic parameters such as inflation, interest rates and economic growth to determine the direction of the market. This strategy was based on fundamental analysis and allowed Tu Jones to profit from long-term market trends.

An interesting fact: a documentary was made about Paul Tudor Jones in 1987, where he shares the secrets of his trade. But since 1990, he has begun to actively fight for the documentary to be withdrawn from circulation, and even buys copies of it. There were several versions about the reasons for this. One of them was that PTJ's trading methods were on the verge of market manipulation and he decided not to publicize it.

Another fact: In 1994, Paul Tu Jones paid a fine of $800,000 (the second largest at the time) to the US Securities and Exchange Commission (SEC) to settle charges of violating the Securities and Exchange Act. At the same time, the financier did not recognize the offense, but did not deny it either.

10 PTJ Rules

1. First of all, the safety of capital, and only then earnings.

2. Suppress emotions.

3. Be passionate about the market, not the trade.

4. Cultivate risk discipline.

5. Take losses for granted.

6. Look for pivot points.

7. Experience and practice are more important than theory.

8. Find a reputable investor, watch him, draw conclusions.

9. Learn to "read" the market.

10. Don't hold on to a weak position.

The Result of $17 Billion

Paul Tu Jones' success in trading in the financial markets allowed him to create one of the most successful hedge funds in the world, attract huge investments and earn billions of dollars for his investors. However, it should be noted that PTJ did not avoid setbacks and disruptions in his career. He ran into serious difficulties in 2008 during the financial crisis, when his fund lost a significant part of its capital. However, he was able to adapt to the difficult situation and rebuild the fund, earning a profit for his investors.

Today, Tudor Investment Corporation is one of the largest hedge funds in the world with investors from 35 countries investing and managing approximately $12 billion in assets (as of 2022). At the same time, the personal fortune of the financier is about another $ 5 billion. Paul Tu Jones continues to be one of the most respected and influential traders in the financial industry, and his success has already been inscribed as an honorary chapter in the World Financial History.

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