5 Things We Can Learn About Trading From Billionaire Paul Tudor Jones

Paul Tudor Jones

Any advice you can get from a billionaire is likely to be a big enough motivator to get you on the right track in terms of finance and future goals. 

But when it comes to getting clarification on stocks, trading, and forex, it can be a huge deal. Getting information from those who are self-made in this way, like Paul Tudor Jones, is advice that makes a real impact.

We all know that your money is not working for you when in the bank. But when you put your money to good use and buy real estate, bonds and understand forex trading, you can see monumental returns. 

If you haven’t already researched how you can invest to see a good return on your cash, then this post is for you.

What is Forex?

Forex is short for Foreign Currency Exchange, and it is the process of swapping currencies into each other. 

As you likely already know, every currency rises and falls. As that happens, there is money to be made in the difference between the two. Buying currency low and selling high. The daily trading volume for FOREX in 2019 April was $6.6 trillion

Forex may also be noted as FX, and it is the global marketplace for exchanging currencies. 

What makes the FX market very interesting is that it is a 24 hour market for five and half days a week. For context, if you are a trader in the US, the ‘end’ of that trading day will be when the Tokyo trading day starts.  Thus, the market is incredibly active 24 hours a day. 

Photo by Joshua Mayo on Unsplash

Do People Make Money From Forex?

Yes. And in particular, Paul Tudor Jones, II. 

Not only is Paul well known for making sound investments, specifically macro currency trades, but he is very open with recommending stocks that we should be watching – and investing in. 

Paul’s current net worth is $7.8 billion. 

Millions of smaller investors also make a good living from forex. It’s simple to get started, and once you understand the process, it can be a great addition to most lifestyles. 

How Do You Get Started in Forex?

It might seem overwhelming, but there are a few simple steps to start trading. 

  1. Learn as much as you can about the forex market
  2. Create a demo account 
  3. Understand your risk limits
  4. Learn to manage emotions, keep a level head and act logically
  5. Have a small bankroll for your trading; starting with a few hundred dollars is fine
  6. Set a financial goal
  7. Use free courses to further your knowledge in economics, finance, and business.

And above all, heed the advice and learn from the experience of people like Paul Tudor Jones, II.

5 Things From Paul Tudor Jones, II. 

Few people can make astute decisions when everyone else around them appears to be failing. Paul, on October 19th, 1987, AKA Black Monday, made some of the most well-known trading decisions. 

Instead of losing millions, Paul made some of the best trades in his life to date. 

Paul started out trading cotton futures at the New York Cotton Exchange, and in 1988 founded the Robin Hood Foundation to help reduce poverty in NYC. 

Here are the tips he lives and trades by. 

Ego-Free

Paul is known for impressing how important it is to set ego aside. When it comes to trading, there is no room to be a hero. You need to ask yourself constantly: are you making the right decision? 

Learn as much as you can, and act on the information that you have. Keep firm control of your actions. 

Risk Management

Stop losses are one of the essential risk management factors in trading. You need to learn how to manage these well. Paul not only uses a price stop, but he also uses a time stop. 

A time stop allows you to watch for moves within a set time frame. If an activity you were anticipating didn’t happen in the time frame, you cut your position. 

Understanding stop losses and time losses will avoid you taking too big of a loss or trading in minimal profit. 

The reason being that your money shouldn’t be trading anywhere that isn’t reacting how you expected – or if there is no profit to be made. 

Size Doesn’t Matter – Sort Of

Paul states that trading in hundreds of millions does feel different from trading smaller amounts. But that the amount you are trading with should never impact the actions that you take. 

Your trading strategy isn’t something you simply stop using when you are using smaller or larger amounts. The size of the investment doesn’t make a difference. 

A trading plan will ensure that your position sizing (in terms of percentage) will remain the same no matter how much you are trading. 

Grow Forward

There will be moments that you have a hard loss or make mistakes. But those mistakes can form to blueprint for your future trading strategy. 

Learning from your mistakes gives you more confidence in future decisions and will provide you with stronger foundations for your future trading. 

Since you are taking meticulous care of your decisions, you will note all mistakes and the outcome. These notes and learning will help you adapt and grow forward with your forex trading. 

Trends Matter

If there is a trend you aren’t following, you are missing an opportunity. As you trade stocks, you will note there are overall trends. 

These overall trends, with some quick calculations, will typically put any trades in your favor. 

Very few times is it wise to go against the trends in the market, but most often, you work with the trends – not argue against them. 

Failure is Fine

Paul is a big believer in failing to make you better at what you do.

He has said in previous TEDTalks that he made many mistakes in trading, and those mistakes have taught him lessons – which he now shares with starter traders.  Paul’s history shows that it is possible to become a multi-billionaire from trading with some learning and a great strategy.

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