Paul Tudor Jones and his trading strategy

Paul Tudor Jones and his trading strategy

Paul Tudor Jones is an outstanding hedge fund manager and one of the most important forex traders of the past century. At the head of his company Tudor Investment Corp, he has multiplied masterstrokes for decades while displaying impressive consistency. While he claims to be into old school trading, he has recently emerged as an advocate of cryptocurrency.

Paul Tudor Jones II is a formidable American investor and hedge fund manager. Recognized worldwide for his brilliant results and his skill in the markets, he has left his mark on finance history.

Early years and education

He was born in 1954 in Tennessee in Memphis. Very early on and throughout his studies, he distinguished himself from others, excelling in extremely varied fields and often having responsibilities.

He first studied at the university in his hometown, where he chaired one of the fraternities. He also became a university champion in amateur boxing.

After obtaining his degree in economics, he began working in the financial markets in 1976, getting hired by the broker E.F. Hutton. After two years, he applied to Harvard but ultimately felt that school would no longer teach him anything useful for the job he dreamed of.

But where did this attraction for the financial markets come from? Jones has often said that this was indirectly thanks to his father. It should be noted that the latter ran a commercial and legal journal in which the young Paul Tudor wrote articles during his university studies under the pseudonym “Eagle Jones.” It was then that he would have read an article about Richard Dennis, the famous commodities trader who formed the group of “Turtle Traders,” which would have left a deep impression on him.

Paul Tudor Jones: A brilliant manager

In 1980, four years after graduating from college, Jones decided to start a trend trading strategy on his own. He then became an independent trader at the Cotton Exchange in New York.

It is also enjoying some success. It’s simple, for four years, he only lost one month. He then decided in 1984 to embark on the management of hedge funds.

The American then launched the Paul Tudor Investment Corporation with assets under management of $1.5 million. This company is headquartered in Greenwich, Connecticut.

Soon the Tudor Group, made up of Hedge Fund Tudor Investment and its affiliates, became involved in trading, investing and finding assets in fixed income asset classes. They covered currencies, securities or commodities.

They also worked with derivatives and other instruments on world markets. Their investment capacities concern global trading, equity investments in the United States and Europe, emerging markets, venture capital and even commodities.

For the record, since 2014, Jones’ net worth has never dropped below $ 4 billion. Until 2008, Paul Tudor Jones did not have a single difficult year. For almost 20 years, the return to + 1.6% in 1993 was its worst year.
Still, at the helm of his group today, Paul Tudor Jones manages more than $ 13 billion. Forbes considers him one of the 40 highest-paid hedge fund managers in the world. His fortune is estimated at 5.8 billion dollars which makes him the 320th richest man on the planet.

The stroke of genius

Without counting his more than impressive results, the native of Tennessee especially marked the history of finance by his masterstrokes which are still told like legends. Paul Tudor Jones is indeed known to have predicted and profited from Black Monday.

This name refers to Monday, October 19, 1987, the day when all world markets experienced significant falls. That day the Dow Jones, for example, lost nearly 23%. These falls were caused by several factors: the strong variations of the dollar since 1985 or the automation of trend trading operations which would have had the effect of amplifying the variations in values.

Shortly before the crash, thanks to technical analysis and analysis of historical data from the S&P, Paul Tudor Jones anticipated the catastrophe. So, he began to massively short US stocks.

With a drop of over 22% in a single day for the Dow Jones, Paul Tudor Jones earned more than $100 million in 24 hours.

A bet that made him world-famous on the financial markets. So, a documentary called Trader – and aired shortly after Black Monday – showed how Paul Tudor Jones did it. But, a little anecdote, the latter than did everything to ban other broadcasts and bought as many copies as possible so as not to reveal his trading secrets.

Man has, therefore, always been an inspiring figure in finance. When he was director of the Future Industry Association, he advocated for the establishment of the first ethics training. It has now become the standard of membership for all trend trading in the US futures markets.

Paul Tudor Jones forex trader – Talented but not a hothead

Certainly, Paul Tudor Jones is one of the greatest traders of the 20th century. But yet, despite his strokes of genius and his exceptional results, he is far from advocating risk-taking at all costs in the markets.

His absolute fear, he himself admits, is that he will suffer loss. “I think I am the most conservative investor in the world,” he once said. “I would say my investment strategy is that I don’t take a lot of risks, looking for trades with extremely asymmetric risk-reward opportunities. 90% of what makes a great trader is risk management. Never negotiate in situations where you have no control, “he often advocates.

Paul Tudor Jones a bitcoin fan

It’s no longer a secret in the markets. Besides real estate, S&P 500, stock market, Paul Tudor Jones is betting heavily on digital assets. It would be a great hedge against inflation, according to him. In an investment advice letter sent to clients in May 2020, the astute manager said he had authorized his hedge fund Tudor BVI to allocate “a small portion” of its assets to bitcoin futures.

Jones first became interested in BTC in 2017, doubling his money before selling it for nearly $ 20,000, its highest level (of the time). For him, bitcoins represent “the epitome of scarcity.” “Bitcoin reminds me of gold when I started in this business in 1976,” he explained in the letter.

But in an interview with CNBC shortly after, he went further, saying Wall Street could witness the “historic birth of a store of value” with bitcoin. He also said he owns nearly 2% of his assets in cryptocurrency. Even his legendary prudence could not fully conceal his enthusiasm “BTC has not yet stood the test of time, like gold, for example. But with each passing day that bitcoin survives, confidence increases.”


Paul Tudor Jones is also a forex trader who uses a significant portion of his fortune to donate. In particular. He made numerous donations to the University of Virginia: $ 35 million for a new gymnasium or $ 12 million for the creation of a new centre for contemplative sciences. In 1988, he co-founded the Robin Hood Foundation, which aims to reduce poverty in New York City.