Trading / Investing

What Can PTJ Teach Us about Negative Trading Years?

4 Min Read

How can one of the world’s most successful traders teach us about losing money in trading? Paul Tudor Jones (PTJ) is considered as one of the best traders of our generation and hasn’t had a losing year in over 2 decades. So what meaningful lessons can we possibly take from him after a losing period?Actually, a lot more than you would think.

He made fortunes when everyone else was losing theirs

Everyone that knows about trading will be aware of PTJ’s meteoric rise to trading fame back in 1987 when he accurately predicted and traded the stock market crash (Black Monday). In fact, the whole thing was documented in a film called ‘TRADER: The documentary’; which is incredibly difficult to find online, as it seems Paul tried to get any copies removed.The documentary showed PTJ and his partner Peter Borish, predicting the crash by running comparisons to the 1927 stock market crash, as well as using Elliott Waves and tape reading techniques to find an accurate entry point. On Black Monday, as the Dow dropped 22%, Paul picked up a tasty $100 million on his trades.So where is the lesson for the years when we make losses? Here it comes…

After shooting for the stars, there was an inevitable come-down

After that mind-blowing performance, Paul struggled to maintain the same returns and in the early 90’s he was reportedly going through a bit of a rough patch with his trading.After his fantastic previous performance and huge levels of wealth, most people in his situation would put the stresses of trading to one side and enjoy a luxurious retirement. However, that was not enough for Paul. He took extreme measures to transform his trading and get back to profitable ways.

Paul looked internally for the solution rather than blaming the markets

tony robbins money

Paul enlisted the help of world-renowned peak-performance guru Tony Robbins, as he could see that the main issue was within himself and he wanted to understand just what steps and measures he could take to fix this mental block he was going through and get back to his best.The cost of these sessions?…. ONE MILLION DOLLARS PER YEAR.Now if that isn’t a statement of intent, I don’t know what is!

PTJ keeps this recipe for success consistent, and adjusts everything else

To this day, PTJ still pays Tony $1 million per year for his work and they communicate on a daily basis. It’s from this constant evaluation and tweaking that Paul is able to maintain his edge and boast over two decades of consistent winning years. He doesn’t rely on his past performance, he knows that he must constantly stay ahead of the game and improve himself without becoming complacent.So if Paul, with all his riches, is still willing to work on improving his game and is even willing to lay down a million bucks per year to achieve that; why are we always so reluctant to take smaller actions, at lower costs (sometimes even for free) to improve our own game? We are too quick to give up, or often too lazy to put in the work.

How can we do the same?

Too many times we are searching for that one KILLER strategy that will make us rich. The Holy Grail system that will allow us to do X Y Z and make ££££. In fact, trading profitably is a game of constant self-improvement and understanding what adjustments you need to make.As I always say, anyone can learn to be a profitable trader. We can show you the tools you need to make money, but you still won’t make money unless you are willing to shape the tools into a strategy that fits the type of person you are and the lifestyle you live. It needs to be customised for you. If PTJ is willing to spend a million to discover how he will shape his strategy to fit his most optimal mindset, you can at least spend some time.So sit down this evening and have a think about some of the thought-processes, rituals and procedures you go through before finding the trades that really work for you. This will help you to see what you rush or do incorrectly when you start losing. If you can identify your strengths and weaknesses, you will know what areas need work.

Bonus Take-Away

(From the horse’s mouth himself) Tony Robbins states that two of the rituals Paul Tudor Jones uses to maintain his winning edge are the following:

  1. He is focused and obsessed with NOT LOSING. He doesn’t think about winning necessarily, he is more concerned with not losing money.
  2. Before he opens a trade he always asks himself “is this a 5 to 1 trade” and if it isn’t, he won’t go for it. He knows he can’t be correct with his trades all the time, so he has to safeguard against that by putting the odds in his favour.