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7 Habits Of The Highly Effective Trader Named Paul Tudor Jones
There is no question that Paul Tudor Jones is legendary in the trading world.
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The founder of Tudor Investment Corporation is worth $3.2 billion, according to Forbes. At the tender age of 32 in the late 1980s, he was already managing over $125 million.
But his most prominent feat is probably predicting the Black Monday stock market crash of 1987, and tripling his fortune in a day by shorting stocks.
There's video proof of him predicting it - on the documentary PBS filmed about him called "Trader: The Documentary." Unfortunately, Jones had a change of heart after the piece was filmed, and wanted it out of circulation (maybe he bought up all the copies?). It's now extremely rare and hard to find- with the VHS going for up to $155 on eBay and hoarded by traders who watch it in hopes of extracting trading tips.
But fortunately for us, we found a highly detailed summary of the documentary at Order Flow Forex, and gleaned some of Jones' quirky and serious habits while he trades.
Jones wants to catch volatility in other markets, so he'll wake up at 4 a.m. to trade gold in Hong Kong, or trade forex on a Sunday in New Zealand.
Even when he was on vacation in Switzerland, Jones traded.
Source: Order Flow Forex
Jones likes to a place a Godzilla toy above his trading computers to ward off the bears.
Source: Order Flow Forex
Jones looks for and predicts volatility in certain markets in order to make a profit. If he can predict a trend and ride it, then it'll pay off big time. In the documentary, Jones trades Deutsche Marks and crude oil based on what he believes will happen to the markets in lieu of recent news events (an OPEC announcement) and a hunch.
Source: Order Flow Forex
“The future of the country hangs on these tennis shoes," Jones joked in the documentary.
Jones puts on his tennis shoes when he's in need of good luck. In Trader, he believes the market will be bullish on December 5, 1986 and places an order for several thousand contracts, taking a long position. The market doesn't do well initially and Jones puts on his lucky tennis shoes. (It didn't work that day, the market closed down that day).
Source: Order Flow Forex
In the documentary, Jones gives a brokerage a limit order to sell 3,000 contracts at a set price. Then he immediately cancels the order and uses a market order to sell 540 contracts at the best possible price available. He tries to spook the market initially with the huge order so he can get a feel for what the market and its participants is going to be like that day.
Source: Order Flow Forex
Jones makes several mistakes in the film, admits it and continues on trading (having such a tough hide is typical and almost a necessity for most traders).
On one Sunday, he tries to buy Deutsche Marks in the Hong Kong exchange at a set price expecting the market to be bullish - but no one will fill his order as he watches the price go up. He later admits he should've just issued a market order and bought at the best possible price.
In another instance, he believes in a bullish market and goes long on several contracts, but ends up losing over $6 million. By market close, he admits that having such bad day is typical and he has learned to live with it.
Source: Order Flow Forex
A key stand-out Jones quote picked out by Order Flow Forex: “If life ceases to be an educational experience, then I probably wouldn’t get out of bed.”
This implies his constant thirst for knowledge and to use that for self-improvement. So in a way, trading is almost perfect for him because, as his economist Peter Borish puts it, he is "graded instantly through the harshest teacher in the world, its the market.”
Source: Order Flow Forex
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