Tudor Jones strategy. Basic King Moves
The biography of Tudor Jones excites many minds and hearts to this day, because it was he who was able to make money during periods when the market was in panic and depression.
His investment fund gave 60 percent of its annual interest to investors when most could not overcome the bank profitability threshold.
The life path of this manager, who dropped out of school and completely devoted himself to the career of a trader, simply cannot help but surprise or motivate him to take action.
However, let's be honest, the lyrics are lyrics, but a real trader should not be interested in the success story, but in what practical techniques he used that helped him achieve success.
So, in this article you will learn the basic techniques and strategy used by the king of financial markets, Tudor Jones.
Practical tips and tricks used by Tudor Jones
If you study most of Jones’s own statements, you may get the impression that he is practically a non-systematic trader, and his trading style is more reminiscent of improvisation based on market conditions.
Yes, this may surprise you, but Tudor Jones perfectly understood and felt the crowd, and in this he was helped by the most ordinary technical analysis. So, let's look at its key principles and rules:
1) Never enter in the middle of a trend
It would seem that at first glance, this statement is simply absurd, since theoretically it is possible to grab a piece of profit from a potential continuation of the trend.
However, in fact, what you call the middle of a trend, as a rule, is the last days of its life; moreover, most likely it moves by inertia at the expense of people like you, while large players are already adjusting to a completely different course of the market.
The most interesting thing is that Tudor Jones repeatedly carried out similar operations and most of them always brought only complete losses.
2) You can’t make money on a trend position if you are not at its bottom
Did you know that Tudor Jones' trading strategy was based on the fact that he did not seek to enter the market, but looked for its reversal points?
Of course, this may seem illogical to many, because finding a reversal point is in many ways similar to playing roulette, but the history of successful traders shows us that success only comes from knowing about the beginning of a collapse or growth.
Many traders have spent years understanding this, and Tudor Jones was one of them.
3) Entering the market with multiple orders
In modern conditions, most books on risk management, and resources dedicated to stock exchange topics, teach traders to let go of their losses and transactions.
Yes, a typical trader, having received a loss on a position, will, as a rule, refuse this strategy signal and will be right in his own way.
Tudor Jones, unlike many, could enter the market repeatedly, despite being stopped out, but he did so as long as the potential profit allowed him to buy a series of losses.
By the way, this trader was never ashamed of the fact that only 15 percent of his total transactions were profitable, but this number was enough to earn billions.
4) Large orders must be hidden
Did you know that most speculative traders in the stock market do not have a strategy in the classical sense, but build their trading process by adjusting to large players, calculating their orders and standing in front of them in the hope of pushing the market along with the shark.
If earlier these were isolated cases and the market sharks could not hide, then after the crowd began to hunt their orders every now and then, the efficiency of trading began to drop significantly.
That's why Jones always split his bids into many small ones so as not to arouse unnecessary suspicion on the part of the market.
5) There is always someone’s interest behind extremes
During the trading process, many traders constantly talk about whether the outlined support and resistance levels are strong or not.
Jones has developed an excellent practice for himself, namely, if he sees the formation of a new high or low after which a rebound occurs, it means that literally at a few points there are large orders and stop orders that the market will undoubtedly try to take.
6) A channel breakdown should be worked out only if a retest has occurred
During the trading process, channels and price ranges were often involved, upon the breakdown of which (a sign of a trend reversal) Tudor Jones opened positions.
However, he traded not just for a breakout of the price range, but only if the breakout was met with decent resistance and a rebound to the starting point of the breakout.
Of course, Tudor Jones, being the largest investor, had information that everyone else did not. However, he was a versatile manager, but the only thing he always had was, of course, a balanced approach to risks.