Paul Tudor Jones

One characteristic that I truly aim to always embody in trading but also in life is to be a forever learner. That has served me very well in my trading career thus far, as I remain hungry for any and all new information and edge that will help refine me even more. As I am finding success as a day trader, it makes me crave even more wisdom, guidance and habits that will serve the future millionaire trader in me now. I want to understand as much as I possibly can so that I can maximize my ability to capitalize on what Miss Market abundantly offers every day. So, in pursuit of that goal, I (Market Mamas host Becky) am creating episodes periodically that highlight the best from the best in the trading industry. In this ‘Learning from Legends' series within the Market Mamas podcast, I will research and offer up the best tips, words of wisdom and tangible gems from some of the world’s most epic traders. And to get us started, I had to go with one of my very favorites. I imagine many of you also have heard of and followed this man. Today I am going to talk about everything Paul Tudor Jones! 

I first learned about Paul Tudor Jones as he was mentioned here and there in various content and on social media threads from other traders. When I read the book Market Wizards, Interviews with Top Traders by Jack Schwager, he was featured early in that book and that shed quite a bit more information on who this trader was and made me fall even more in love with his style, evolution over time, and trading business management systems. For your reference, here is a link to that book because it is an excellent read and I highly recommend it to you all to learn more about not only Paul Tudor Jones, but many other epic traders featured there as well. https://amzn.to/4i63Y5u (#sponsored, thank you Amazon!)

You guys, Tudor trades how I like to trade! His style is in sync with how I am understanding the market, intentionally and carefully contrarian, and always protecting his backside. I, nearing my 4 year mark as a trader, am still a fair distance from being as dialed in and consistent with this as he has come to be from being a trader for more than 45 years. That success longevity is yet another reason why he is very worth attention and studying - that experience is exceedingly powerful! 

To give you an early example of who this man is, here is a quote from him ascertained by Schwager for the Market Wizards book. “There is nothing worse than a bad trading day. You feel so low that it is difficult to hold your head up. But if I knew that I could also have a similar experience in the exhilaration of winning, I would take the combination of winning and losing days any time because you feel that much more alive. Trading gives you an incredibly intense feeling of what life is all about. Emotionally,  you live on the extremes.” This is trading! Not investing or dabbling without knowledge. But being a TRADER! You have to have a strong emotional fortitude and resilience to sustain in this game, because his quote is the reality - the hard losses are painful. But the solid wins are incredible. And if one has the dedication and grit to study, learn, dig in and endure, getting to a place where losses are minimal and small, and wins are legit and impactful, it’s the best fucking job in the world, in my opinion! It is truly living, pushing yourself and seeing what you can seriously achieve. You are not choosing a safe and quiet life when you make trading your business. But you are challenging yourself in a world that truly is limitless for the brave. 

Paul Tudor Jones is an American billionaire hedge fund manager, best known for founding Tudor Investment Corporation, a leading hedge fund. Born in 1954 in Memphis, Tennessee, he earned an economics degree from the University of Virginia in 1976. Within his family, his uncle was a very successful cotton trader when he was growing up. After college, Tudor then started to pursue trading with his uncle directing him to a friend that would become Tudor’s mentor. That early and influential mentor was the legendary cotton trader Eli Tullis, who guided him and got him started on the NY exchange floor as a clerk in the cotton market. I love how Tudor highly regards his early and powerful mentor whom he started learning from at age 21, who emphasized and embodied emotional control as a key trait required for all successful traders. So, Jones started his career as that commodities trader and then later gained fame for predicting and profiting from the 1987 stock market crash, making substantial returns while most investors suffered heavy losses. But how did he get to that place where he was so skilled and successful to be able to navigate that massive volatility so profitably? Let’s learn more about him!

One question I love to ask successful traders when they come on the Market Mamas podcast is what was their lowest low as a trader that became a significant turning point in their career. Now I did not have the honor of having Paul Tudor Jones on the podcast, but one day that would be incredible! However, if I asked him this question, based on my research, this situation I am going to tell you about fits that description. Tudor is quoted saying: “Never play macho man with the market. And never over trade.” These specific lessons were cemented in his mind from a hard trade on the cotton commodities exchange floor early in his career when he went in way too heavy for his accounts. In that one trade with massive size, he reportedly lost 60-70% of all of his account’s equity. This was a massive hard hit made on the floor in front of his peers when up to this point, he had been steadily developing very well as a trader. Reportedly, at this point, he seriously debated quitting trading 3 ½ yrs into his career. This definitely reads and has been told by him as an event that shaped him and forced him to prioritize discipline and to treat trading like a business.

In the Market Wizards book on this topic, that shift he made from that point moving forward had him prioritize peace, happiness and discipline for his life over ego and showmanship. He pivoted even more to be quicker with trade management and more defensive. A famous Tudor quote is: “I’m always thinking about losing money and not making it,” or similarly said by him, “Don’t focus on making money; focus on protecting what you have.”  This traumatic trading event changed him, his style, and lowered his volatility as a trader. It was the turning point that really began defining his exponential growth in the trading world in the coming decades. 

Not long after that time, early in Tudor’s career, he started as a money manager by establishing the Tudor Futures Fund in Sept 1984 with 5.4 million dollars under management. This fund was steadily profitable from inception with rapid growth to the point that Tudor stopped accepting new clients in 1987 to contain their size so they could remain effective active managers of that kind of money! 

One trading style Tudor is well known for is his contrarian approach to getting into a trade. Similar to what I refer to as mean reversion trading (https://youtu.be/IlpJmFjIg4Q?si=Y6f7jeXJUoUbVBdN), this is getting into a trade at a key turning point location for your market. Such as getting in a long position after a consistent down move to the goal of having an excellent entry for a strong bullish bounce up and/or trend reversal. From interviews, Tudor will attempt to get his position established until he determines fundamentally that this trade plan is wrong. This may require multiple entries with close stops until the trade holds or he has data that changes this plan. So in this system, you would get into your position at a point but with a close protective stop that you unwaveringly honor. You may then take these small hits a few times, but if the data is still showing that this may be the move, then you try again and once the trade location you got in at holds, you can capitalize on that sick entry. And often these bounces are powerful once they do pop and can be incredibly profitable. 

Now, on the risk management side of this approach, what if that location is not in fact a pivot point and you are only just losing? Well he manages that situation quite impressively and in a way that I am learning to also emulate in my trading system. Tudor will trim his position size if he has determined that he is not trading well. On this subject, reportedly, his rules include: don’t ever average losers, decrease your trading volume when you are trading poorly, increase your volume when you are trading well, never trade in situations when you don’t have control - such as trading before key news reports. He even has been quoted quite frankly saying “losers average losers.”  Jones repeatedly warns against adding to a losing position, as this choice often leads to even greater losses. I love this quote from him where he said: “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, there’s nothing better than a fresh start.” That approach is honestly quite calming and reassuring. Cut your risk and loss and then re-analyze with a clearer mind that is not as muddled from being upside down in a live position. From my experience as well, it is much easier to be present and open to what my data is telling me when I am not actively able to see my P/L fluctuating when it is in red. 

I think who Paul Tudor Jones is as a person and a trader is honestly the biggest draw for me to him. From everything I have read and watched about him, his energy and approach seems so organized, intentional and strong. He has been observed as a relaxed person in his interpersonal relations, but with an aggressive, intense and bold trading energy. When he is going for a trade, he calls it out with high energy and pays acute attention to and is in control of every aspect of his trading that he can. But can easily pivot to a calm, open conversation with someone even minutes later. That’s such an admirable quality and ability to me! I also love how flexible he is. If he’s trying for a certain move and it just isn’t happening, he is able to reverse his trade plan for that instrument based on the evidence he is witnessing, instead of remaining married to a setup that just isn’t producing. One awesome technical tip I’ve gathered from Tudor relevant to that adaptability is how time is an important factor with a trade plan. If you enter a short position anticipating a fall and the market does not move for an extended period, that could be a key sign that it wont. A factor to weigh heavily for potentially exiting if the trade isn’t going. This is a killer defensive tactic that a trader will learn with time and experience. So good!! 

One powerful skill of Tudors is his ability and decision to let go of losses in his mind as fast as possible. He said: “What I care about is what I am going to do from this moment on. I try to avoid any emotional attachment to a market.” If he took a stop out on a trade, that’s that. What now is the market telling him and what’s his next move? This lack of an emotional attachment to trades really can allow an open mind to what is actually unfolding on the charts. Hence, making the flexibility easier. To this purpose of staying disciplined and unemotional as a key to success as a trader, Tudor has also been quoted saying: “At the end of the day, your job is to make the best trades possible, and money is a byproduct of that.” This is a trading sentiment that I wholeheartedly appreciate and embrace. When I stopped just day dreaming of fat profits while trading with way too much variability, and instead dialed in pursuing the best and most intentional trade within my edge each day, the profits followed at a much steadier pace for me as well! So powerful! 

Another component of Tudor’s trading style that he is well known for and has served him very well over time is that he trades his smallest position size when his trading is his worst. What that means is when he is taking losses, he will steadily decrease his position size and exposure to the market until he gets his personal trend reversal and begins steadily winning his trades again. I just loved when I read his quote saying: “The most important rule of trading is to play great defense, not great offense. Every day I assume every position I have is wrong.” This mindset as a trader is major for keeping one humble and attentive to every aspect of their trading, always factoring in the ‘what if’ scenarios. He said he chooses to enjoy positions that are going in his favor, but to also always be clear and honor his game plan for getting out when the technicals tell him too. And that’s just it, right? That is the profitable trading system in a nutshell!

As traders, we need to always question ourselves and our ego and respect the game of risk that trading truly is. Be confident once you have a studied and consistent trading process to execute, but keep the confidence in check so you remain vigilant to the potential risk. Even the legendary Paul Tudor Jones has admitted that he has learned through experience that his greatest losses have been after awesome wins. That speaks to the risk of allowing an overconfidence into your choices that leads you to bend your rules. As I have also been guilty of on more than one occasion and try to always remain cognizant of! 

In the excellent book I keep referring to, Market Wizards, I really liked when author Schwager asked Tudor: if your market trade idea is against the greater trend and market sentiment, what do you do? To this, Tudor responded simply: “I wait.” This has, for me, been a major area of growth in the last year, as I have had to prioritize patience with my entries. I definitely have a tendency to jump into a trade before it is fully set up and hence take too much heat in those trades. Tudor has said how if he has a trade plan, he then must wait for the charts to give an entry signal. Then when he does get in, he manages the trade tightly at that entry signal point. If that location holds, he’s golden to hold the trade! If the trade is not quite ready yet, his loss is so small that he remains calm, focused and attentive to a potential new signal to present with time. That chill and specific trade management style is gold!! This is why I am starting this ‘Learning from Legends’ subcategory on my Market Mamas podcast! We, as developing traders, are learning all of these techniques, but when I can hear these quotes and trade management choices from decades long massively successful traders, the message sinks in deeper. I know I am not quitting trading ever, so I will listen intently to the wizards that have come before me! 

Beyond finance and business, Paul Tudor Jones is known for philanthropy, notably founding the Robin Hood Foundation, which combats poverty in New York City. Tudor said: “The markets have been so good to me that I feel like I should give back something in return.” I just love this strong positive karma and gratitude spirit! That is so my type of vibe and who I intend to always be!! And similarly, at his finance company, he has chosen to teach and become a mentor himself to pay it forward from how his mentor gave him his opportunity and early education. Again, with the beautiful pay it forward energy that is really just wonderful to witness. 

Jones’ philosophy centers on cutting losses quickly, staying flexible, and always prioritizing meticulous risk management over chasing returns. Throughout his long career, he has prioritized being a continual learner dedicated to everything around the craft of trading, and attentive to both the technicals as well as fundamentals within his trading business. So well-rounded and powerful, I just love everything I know about him! As of February 2025, Paul Tudor Jones continues to play an active role in the financial industry. He serves as the founder, Co-Chairman, and Chief Investment Officer of Tudor Investment Corporation, the hedge fund he established in 1980. In addition to his professional endeavors, Jones maintains an active presence on social media platforms, such as X (formerly Twitter), where he shares insights and updates. 

My main goal and hope with this Market Mamas episode is that I did some kind of justice to the wisdom and experience this man has amassed and shared over time. I love trading and am completely dedicated to continual pursuit in this business for me. And I’m pretty into the opportunity hosting this podcast provides me as well. I believe we can help each other out and all pursue greatness together. There is tremendous power in a supportive community and I am so grateful to anyone who has read to the end of this episode blog and is still here and hence is allowing me the privilege of contributing to your trading support system. Please send me a comment (https://www.market-mamas.com/contact) if you are into this podcast series idea and have legendary traders that you would like to hear me cover in future episodes. Take care and happy trading!