10 Trading Rules of Paul Tudor Jones to Become a Better Trader

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Description: When it comes to futures trading, Paul Tudor Jones is the name to reckon with. One of the most successful and prominent futures traders of all times, his money management skills saw him grow the corpus of his Tudor Futures Fund from a moderate $1 million in 1984 to over $330 million in 1988 as it added more members on the back of strong performance.

As per a Forbes Magazine study in February 2017, Paul Tudor Jones’ net worth was pegged at around $4.7 billion.

With such an exemplary track record, it only makes sense to follow in the footsteps of this legendary trader. Here are the 10 Paul Tudor Jones trading rules to live by:

1. “At the end of the day, your job is to buy what goes up and to sell what goes down so really who gives a damn about PE’s?”

Paul doesn’t pay much attention to the fundamentals as he believes that the fundamentals are already priced in.

2. “Don’t Average Losers.”

Averaging a losing position is not recommended by Paul as it can further increase the drawdowns.

3. “Decrease your trading volume when you are trading poorly; increase your volume when you are trading well.”

Everyone goes through some good phases and bad patches in trading. Paul advises to capitalize on those phases.

4. “If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.”

It is always better to close out a losing position quickly than to wait and hope for a miracle to happen.

5. “Don’t be too concerned about where you got into a position.”

Timing a trade is important but not too critical for your trading success. Some leeway is acceptable.

6. “Never trade in situations where you don’t have control.”

Paul warns trading just in the face of an earnings report as this can have some serious implications on your portfolio due to volatility.

7. “Play great defense, not great offense. Every day I assume every position I have is wrong.”

Accepting your mistake when you are wrong is a great virtue in itself. Close out a trade when you feel that you are wrong. Don’t be egoistic.

8. “If you make a good trade, don’t think it is because you have some uncanny foresight.”

Don’t be superstitious. Be rational.

9. “Never play macho with the market and don’t over trade.”

Never trade against the overall direction of the market. You are just a speck of dirt in front of it.

10. “I look for opportunities with tremendously skewed reward-risk opportunities.

Pay heed to the risk-reward ratio before you decide to jump in on a trade. Paul always believed that managing the risk well will take care of the returns as your downside is limited.

We hope these Paul Tudor Jones trading rules will help you tremendously in improving your trading results.

To further improve your trading skills, you may join our Qualified Market Trader (QMT) stock market course where you get to learn time-tested and proven trading strategies.

Follow Abhijit Paul:
Abhijit prefers to define himself with the 3is – investor-trader, instructor and influencer. He has over 14 years of experience in the Indian Financial markets, and is currently, a SEBI Registered Research Analyst and an active trainer. He offers unparalleled services in both training and advisory.

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