Paul Tudor Jones - Trading Strategy
Who is Paul Tudor Jones and why we follow his strategy.
Paul Tudor Jones is one of the most successful traders of the past century. His net worth is around $3.3 Billion and he mainly focuses on short-term trading.
On October 19, 1987, the financial markets across the world crashed in what is referred to as “Black Monday.” Tudor Jones and his colleagues had been predicting this for some time. So, while the world around him crashed and burned, he managed to make a profit of 62% by holding on to short positions. That year, he made a profit of $100 million.
His strategy and principles are tried and tested and followed by most of the new and young traders and investors.
7 To-Do List + Bonus
Always be with the predominant trend.M metric for everything is the 200-day Moving Average
Your job is to buy what goes up & sell what goes down who gives damn about PE ratio.
The better you can make decision ahead of time,the better your results will be.
Plan your decision and strategy like which stock to buy, time and price to entry, stop-loss and all technical and fundamental analysis then only enter on arena and trade it.
To be a good trader,you have to be a contrarian.
When people say market will crash or go down, think it in contrarian perspective, what if it goes up.
Contrarian thinking doesn't mean when market is going up you should short, it means what people's behavior about the market and what you think and make an opposite point.
Find something where you get Risk-Reward so greatly that you can take small investment with minimum draw-down pain and maximum upside opportunities.
Decrease your trading volume when trading poorly, increase when trading well.
When you are getting losses stop trading, breathe and write down what did I wrong, is it price action analysis, it is technical analysis or fundamental analysis.What?
Write down in journal
Then after creating a strategy start trading with small amount. Small wins.
Test the strategy and observe the win rate.
Every day I assume every position I have is wrong. I know where my stop risk points are going to be...so I can define my maximum drawdown.
Know and measure the risk of loss.
If you don't see anything, you don't trade. You take risk only when you see an opportunity.
If you don't see opportunity in technical analysis or fundamentally strong don't trade.
If the trade don't follow your system just don't do it.
7 Not-To-Do List + Bonus
Never play macho man with the market. Don't be a hero. Don't have an ego. Always maintain your sense of confidence,but keep it in check.Always question yourself and your abilities.
Never Over Trade
Never trade in situation where you don't have control
What is control trading, when in control trading you know how much will come and how much will go.
Don't risk significant money in front of key reports,since that is gambling not trading.
I have any position going against me, I get right out.
Don't ever average losers.
Always liquidate half position below new highs or lows and the remaining half beyond that point.
When you feel that market is crash or go up or uncertain, don't cut full, do half-half.Retain half.
The most important rule of trading is to play great defense, not great offense, don't focus on making money, focus on protecting what you have.
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