Most men walking the surface of the earth tend to more often than not revere anyone who has attained immense greatness through their craft.
In most cases, that person revered possesses an almost god-like ability, that they tend to stand out from the crowd.
Their achievements are so colossal that it almost looks as if it could take a regular person ten lifetimes to accomplish similar fit
I know that feeling, I am also a mortal, and I do share such sentiments.
In trading, there are a few traders that fascinate me in so many ways.
Not just because they are/were financially successful, but I also admire their trading ideology, and how they created a unique niche in trading for themselves.
Who are some of my favorite traders you are asking?…
Let’s check them out.
1. Stanley Druckenmiller
- He successfully ran his own hedge fund (Duquesne Capital Management) for 30 years, with annual returns of 30%, without a single losing year.
- He was hired by George Soros to work with him at his hedge fund (Quantum Fund) and in 1992 Soros broke “the bank of England” (Black Wednesday) with the assistance of Druckenmiller. 1 billion dollars was realized in revenue.
- His net worth is over $2 billion dollars
Quote:
If you’re early on in your career, and they give you a choice between a great mentor or higher pay, take the mentor every time. It’s not even close. And don’t even think about leaving that mentor until your learning curve peaks.
Note:
Stanley Druckenmiller may not have achieved his level of success without his mentor George Soros, and he acknowledges Soros in many of his quotes.
The journey to mastery is always smoother when you have a mentor to lead you across the bumpy ride which more often frustrates many traders and sometimes causes their early career demise.
2. Bruce Kovner
- Kovner was academically gifted, he was a merit scholar, and also an accomplished basketball player and pianist in high school.
- Kovner was once a cab driver, while he also worked on political campaigns.
- Kovner’s first trade was in 1977 with $3,000 borrowed against his Mastercard, he made a profit of $1,000.00 on his first two trades and quickly turned his $4,000 to $45,000 through a soybean trade.
- From the Soybean profits, Kovner was able to withdraw $22,000.00. H later lost over half of the account in an hour, due to poor money management. This made him physically sick for a week.
- He later learned how to be a better trend trader under the apprenticeship of Michael Marcus.
- Bruce Kovner finally became a hedge fund manager and founded Caxton associates which is a global macro hedge fund
- Bruce Kovner net worth is $5.3 billion (November 2019)
Quote:
Risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half.
Note:
You have to continuously strive to improve in your craft by first being honest to yourself.
Bruce could have easily told himself that there was no big deal losing half of his profits. Afterall he still made a huge kill after losing half of his gains.
He was humble enough to accept his flaw and also looked out for a mentor who made him a better trader.
3. Michael Marcus
- While in school he came across a man who claimed he could double his money every 2 weeks. Marcus lost all his money on the man’s commodity tips.
- Since Marcus was academically gifted, he decided to take on the challenge to study trading by himself, he had a gut feeling that he would be successful at it.
- After a little success in the market, Marcus quitted school and became a full-time commodities trader, but not without the help of his family and friends who assisted him financially.
- Marcus lost all his money on a trade he took. This forced him to get a job as a research analyst with Reynolds securities for commodities.
- He was later tutored by Ed Seykota, who taught him his trend following technique.
- Finally, he joined commodities corporation where he turned $30,000.00 of his firm’s capital into $80 million in less than 2 decades.
- During his time at the commodities corporation, his returns often exceeded the returns of all the traders combined
- He has also been called the GENIUS TRADER
Quote:
Perhaps the most important rule is to hold on to your winners and cut your losers. Both are equally important. If you don’t stay with your winners, you are not going to be able to pay for your losers.
Note:
Too many times we set profit targets that are far less than what the market can offer us and other times our poor trading habits push’s us to exit trades prematurely.
These habits always affect our bottom line and could lead many new traders into having several blown accounts.
Like Marcus advised, you have to find a way of taking advantage of your winning trades and cut off those losers before they eat into your profits.
4. Ed Seykota
- In 1972 he embarked on a trading career pursuit after he earned his S.B degrees in electrical engineering from M.I.T and management from the MIT sloan school of management, both in the same year (1969)
- He is ranked as one of the best trends following traders of our time
- He is ranked to take big risks and he also gets big rewards.
- At one point he turned a client’s money from $5,000.00 to $15 million in just 12 years
- Ed is a self-taught trader and has been a mentor and teacher to some of the great traders including Mark Marcus, David Druz and Jim Hammer
Quote:
Charting is a little like surfing. You don’t have to know a lot about the physics of tides, resonance, and fluid dynamics in order to catch a good wave. You just have to sense when it’s happening and then have the drive to act at the right time.
Note:
Ed Seykota believes so much in a trader developing a sixth sense for the market. The ability to read the market freely.
This ability is what makes a selected few traders benefit from a setup before other traders get to see the move.
5. Bill Lipschutz
- While studying to become an architect at Cornel University, he inherited a portfolio of shares worth $12,000.00 from his dead grandmother
- He graduated as an architect and also had a second degree (MBA) which he used to work for Salomon Brothers, which was an American investment bank.
- Bill increased his $12,000.00 trading account/inheritance to $250,000.00 within 4-5 year period.
- He was considered one of the top 5 of all forex traders and in 1985, Lipschutz was earning $300 million per annum for Salomon Brothers.
Quote:
If most traders would learn to sit on their hands 50% of the time, they would make a lot of money.
Note:
Bill re-emphasizes the need for traders to be patient through his quote.
Most times as traders, our quest to make money fast, drives us to take half baked trades and in the process deplete our trading account.
When the high probability setups finally show up, we are then forced to over-leverage and destroy whatever is left of the malnourished account.
Patience always pays in trading.
6. Paul Tudor Jones
- In 1976 Jones graduated with a Bachelor’s degree in economics from the University of Virginia, while there, he was a welterweight boxing champion.
- After reading an article by Richard Dennis, he got inspired to go into trading. So his uncle Billy Dunavant (who was a very successful cotton trader) assisted him.
- One of his earliest and major success was the prediction of black Monday in 1987. He tripled his account due to a large short position size. He earned an estimated $100m
- Jones is the CEO of Tudor investment corporation, and he is worth $5.1 billion (May 2020)
Quote:
Everyday I assume every position I have is wrong
Note:
Paul Tudor Jones is unarguably one of the greatest traders and if there is one thing he doesn’t joke with is money management.
I mean what kind of trader pushes a buy or sell button with the mindset that the trade taken is a loser?
If there is anything we can learn from Tudor, it would be not taking risk for granted
7. Andrew Krieger
- Andrew is a graduate of Wharton Business school, he later worked with Banker Trust in 1987 and made $300m in profit when he sold the NZD (New Zealand Dollar)
- Krieger knew when to take advantage of artificial high pricing so much so that his activities resulted in the market correcting itself
- His name is associated with the chaos that ensued on black Monday of 1987
- With the full support of the Banker Trust board behind him, his trading limit was vastly increased from $50m (the normal limit for traders at the time) to $700m
- He made about $300 million on a single trade during the black Monday, other sources actually suggest that the actual profits made were as large as $700 million
- He has been trading for 35 years, and 33 of them are in the green. He also managed to maintain anonymity for the past 33 years while trading big
Quote by Paul Tudor Jones:
If you ever wondered what it’s like to trade a billion dollars… Nobody knows better than Andy Krieger
Note:
Krieger is one trader that fascinates me, because he managed to maintain anonymity at the peak of his career, giving him a Ninja-like persona.
Krieger is one trader that took his trading intuition to the next level. He could sense when the market was overpriced or underpriced.
8. Steven Cohen
- Steven is a graduate of Wharton School of the University of Pennsylvania with a degree in economics.
- While in school Cohen was an avid poker player, and he attributes his willingness to take huge risks in the market to his poker playing days.
- At age 21 he got a job in wall street as a junior trader in the options arbitrage department at Gruntal & Co. Legends have it that he made $8,000.00 in profits on his first day on the job.
- 6 years later, his profits were ranking $100,000.00 a day. He is a good scalper as it was mentioned by his colleagues that he sometimes manages to enter up to 300 transactions per day.
- He is the founder of hedge funds: Point 72 Asset Management and SAC Capital Advisors and his net worth is about $14.1 billion (February 2020)
Quote:
I always tell my traders that they would have loved the 1990’s because it was fairly easy time to make money
Note:
It meant a lot to me and I am sure to many other traders that Steven acknowledged the fact that trading the markets years ago was a whole lot easier.
Meaning for those of us who are currently trading the market professionally, kudos.
It takes a whole lot of trading skills to be and remain a profitable trader
9. George Soros
- Soros attended the London School of economics, he graduated with a Bachelor’s and eventually a master’s degree in philosophy.
- Soros is also known as “The man who broke the bank of England” because of his short sell of the Great British pounds which was worth $10 billion. Soros made profits of about $1 billion dollars during the 1992 Black Wednesday UK currency crises.
- George attributes his success in the 1992 Black Wednesday UK currency crises to the studies of philosophy.
- Between 1979 & 2011, he has donated more than $11 billion to various philanthropic causes.
Quote:
It is not whether you are right or wrong, but how much money you make when you are right and how much you lose when you are wrong
Note:
Despite the fact that George Soros made a fortune trading the market, we can still see that he respects risk when trading.
He is not arrogant about risk-taking because he is well aware that it’s very easy to donate money made from the market, back to the market
10. Homma Munehisa
- He lived within the period of 1724 – 1803
- He was born into a family who were rice merchants, and back then rice was the lifeblood of Japan. You literally paid your tax using rice.
- Back then you could trade rice through the use of coupons, which meant you didn’t have to bother if rice would be available at the delivery date, all you needed to know was the “most likely price” on the day the coupon specified delivery.
- Since Homma needed to know the price of rice each day, and the only way he could do that was going to the Osaka exchange daily, which was over 500 miles from where he lived.
- He employed an ingenious technique of positioning a group of people every 6km from where he lived (Sakata) to Osaka, all he needed was the daily opening and closing price of rice.
- He invented the candlestick and their patterns in the ancient day Japan by simply recording price of rice at the open and close of the day for weeks, months and years
- He was known to have made 100 consecutive winning trades and his fame spread throughout Japan. He was considered the “god of the market”
- Over time he became the financial adviser to the government of the day and was raised to the rank of Samurai.
- His books Sakata Shenso and Soba Sani No Den increased his popularity and the meaning he ascribed to his patterns was known as the “Sakata Rules”, which is the basis of modern candlestick charting.
- He was rumored to have a net worth of over $100 billion in today’s dollars, and in a good year, he made over $10 billion.
- Munehisa ran and managed futures CTA, a hedge fund in the 18th century which performed outstandingly for over 50 years
Quote:
“This text should never be shown to anyone, no matter how close that person is to you. Not because I want to be the only rich man. But because this text may be misunderstood by people who will most likely make many mistakes, but the worst part is that the text can cause huge damage and as a result will turn against us. I do not recommend that anyone read this text and it should remain a family secret. In particular, San-Poh (three methods) is a very unique technique and only a few people know it all over the world. If you sell or buy using only this method, you will achieve steady profits, build a fortune, and never make a loss. You should know what value this text has, be careful and determined as to the secret that is contained in this text
Note:
This quote was what took my respect for price action to astronomical levels.
Homma Munehisa never intended to publish his findings on candlestick patterns and how they worked in the market to the general public, rather he wanted the candlestick knowledge to be retained within his family.
Homma spent 60 years of his life trying to perfect a technique generally known today as price action.
Price action is phenomenal because even after over 250 years, the market still plays by the rules discovered by the “god of the market” (Homma Munehisa).
For that, the candlesticks are still my number one indicator.
In Conclusion
Each trader discussed had/has a unique way of exploiting the weakness of the market.
Studying each of these traders, further buttressed the fact that there is basically no one way of trading the market.
All you need is to study a system that works and over time craft your own trading system that meets the requirements peculiar to you.
Comment below which of these traders is your favorite, and also let me know if I omitted a trader you admire.
