The Greatest Traders in the World & Their Success Stories

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When the coronavirus pandemic is still hitting many jurisdictions hard and keeping the globe’s economic growth in check, many investors have turned to methods that free them from dependency on consultants and give faster returns effectively. Trading apps and brokers, accordingly, have recorded a new account proliferation but a high washout rate. Regardless of trading objectives and strategies, the market looks like a gorilla that not many people can defeat. Having said that, world history revealed outstanding figures who were capable of making substantial chunks of money in different financial markets.

3 of the Best Traders Alive

No matter how drastically the financial industry has fluctuated, there are always standouts who pull off trading foreign currencies and other investment products. Despite distinct trading and investing strategies, they may find effective ways to get through unexpected events and outsmart the market. Three impressive stories of such traders in different sectors will motivate you to go on the career path of trading.

George Soros (1930 – present)

George Soros embarked on his investment career by working for numerous merchant banks in the United Kingdom and the United States. In 1969, Soros established Double Edge, whose profits contributed a significant portion to seed funding for his second fund named Soros Fund Management a year later before it officially became the Quantum Fund. The business specialized in high-risk ventures, yet great returns on capital for investors.

One remarkable event that cements Soros’s status and reputation in the investment realm took place in 1992. With the support of the fund’s associates including Joe Lewis and Stanley Druckenmiller, George Soros recognized the overvaluation of the British pound after it had been inaugurated to the European ERM mechanism, which controlled exchange rates within a predefined range to stabilize financial systems. However, he and other companions believed that the rate was set too high in fragile market conditions, so decided to open a huge short position of US$10 billion worth of pounds to speculate on the pound’s depreciation.

After compelling the pound to get out of the ERM, this Black Wednesday became one of the notorious events that made the Conservative Party relinquish its power. Concurrently, this high-risk deal brought Soros an incredibly substantial profit of US$1 billion and headlines have nicknamed him “The Man Who Broke the Bank of England” until now.

In some publications penned by Soros, he mentioned the General Theory of Reflexivity as an assistant behind his financial success. But according to many financial experts working with Soros, his investment principle differed from that theory.

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James Marquez, a former chief investment officer at the Quantum Fund said that Soros’s strategy often went against the rules. Instead of depending largely on hypotheses that better his understanding of the market performance, he focused on exit points and order sizes. In John Train’s book, The New Money Masters, Soros also shared that his strategy worked mainly because it empowered him to “correct wrong predictions” but rather endeavor to make the right ones. His seemingly strange philosophy has undoubtedly turned him into one of the greatest currency traders in the world.

John Paulson (1955 – present)

Commencing his consultancy career in Boston Consulting Group in 1980, John Paulson then switched many jobs before founding his first hedge fund Paulson & Co. in 1994. Not until the 2007 financial crisis did Paulson and his companies become world-famous for conducting one of the greatest transactions in Wall Street’s history.

Seeing the real estate bubble forming, John Paulson was among few traders who believed that it would burst one day. Therefore, in early 2005, he started speculating on subprime mortgage-backed bonds known as collateralized debt obligations (CDOs) by using credit-default swaps (CDSs) despite his unfamiliarity with these instruments. Whilst the world economy was going into recession, Paulson himself earned roughly US$4 billion and his funds pocketed a fortune of US$15 billion. Unfortunately, this extraordinary success put him under the thorough inspection of the US federal government.

His company’s operations then targeted event-oriented investments including acquisitions, proxy contests, mergers and many more. However, in July 2020, he declared that the company would give funding back to investors and be converted to a family business.

Jim Simons (1938 – present)

Jim Simons is a prominent mathematician and a quantitative trader who applies algorithms and mathematical frameworks to capitalize on market anomalies. Being awarded a Ph.D. in mathematics at the age of 23, Simons then landed an academic job as a mathematics professor with the most famous theory of pattern recognition before engaging in the hedge fund in 1982.

In late 1978, the forty-year-old genius founded an investment company called Monemetrics which was renamed Renaissance Technologies Corporation. With the assistance of Leonard Baum, his former colleague and mathematician, he successfully built a trading system to bet on foreign currencies and then pioneered the quantitative method in the financial industry. Accordingly, his company handles the mass of data to determine and benefit from market patterns. For this reason, investors may remove behavioral factors out of their trading decisions and increase the likelihood of winning.

Because of investment returns constantly generated by Renaissance Technologies’ hedge funds, Jim Simons’s ever-increasing net worth reaches US24.6 billion as of May 2021. Additionally, Simons himself is known as the greatest hedge fund manager of all time, according to the Wall Street Journal.

Who is the Best Stock Trader in the World?

When it comes to the best stock traders in the financial industry, most people often think of Warren Buffett, who is considered as one of the greatest stock-picking legends. However, reality proves that he always pursues the value investment philosophy of Benjamin Graham, which aims at estimating the intrinsic value of an instrument rather than anticipating market movements. What’s more, many individuals confuse investing with trading which describes the act of speculating on temporary market volatility to generate profits.

Besides the excellent forex traders, the financial world also witnesses the appearance of exceptional stock peers. It is challenging to pick one on the throne but the part will try to detail the biographies of the three greatest stock traders in the world: Paul Tudor Jones, Steven A. Cohen and Ross Cameron.

Steven A. Cohen (1956 – present)

Cohen’s interest in trading stocks was provoked when he still studied economics at the University of Pennsylvania. Having received a bachelor’s degree in 1978, he became a junior options trader at Gruntal & Co. and reaped an US$8,000 payback on his first working day. His consecutive achievements that helped the company offset incurred losses by other peers even made competitors admit him as the best stock trader. The BusinessWeek or Bloomberg also called him the most powerful trader on Wall Street.

After quitting his job at Gruntal, he operated his own hedge fund S.A.C. Capital Advisors from 1992 to 2016. Following the philosophy of rapid-fire and high-risk trading, Cohen succeeded in obtaining 70% returns on investment during the Dotcom bubble and an additional 70% gain thanks to his short sale of the same stocks in 2000. Or the company’s long position of US$26.7 billion on Ardea Biosciences was boosted to approximately US$40 million three weeks later, shortly after the acquisition by AstraZeneca.

Paul Tudor Jones (1954 – present)

Shortly after leaving the University of Virginia, Jones was mentored by Eli Tullis to trade cotton futures at New York Cotton Exchange. He then was in charge of different positions before launching Tudor Investment Corporation in 1980. The company’s operations cover global macro trading, venture capital, investments in commodities and so forth.

His first achievement was made in the 1987 stock market crisis. A few weeks before the Black Monday scandal, many traders acknowledged the heavy tolls of portfolio insurance in market turmoil and chose to conduct a short sale. So Paul Tudor Jones was not the only person who could realize a golden opportunity on substantial market swings. But he scored the biggest earning from the bearish market, particularly an after-tax profit of US$100 million. In 1990, Jones also profited from shorting the Japanese equity market after foreseeing its plummet.

David Tepper (1957 – present)

Before being recognized as one of the highest-earning hedge fund managers in 2018 by Forbes, he spent years working as primarily a credit analyst at Equibank, Goldman Sachs and other financial institutions. In 1993, he built Appaloosa Management and mostly dealt in distressed securities. His fund made the first investment in Algoma Steel, a steel business teetering on the edge of bankruptcy but rapidly faced a 25% loss. Still, he continued his aggressive trading style and his company eventually got a 150% return from shares of other distressed companies such as Worldcom or Enron.

Most noticeably, despite the global economic downturn of 2008-2009, Tepper’s hedge fund still purchased distressed financial shares of such large banks as Citigroup or Bank of America which ended up rebounding from their lowest levels. This transaction gave the company a massive amount of US$7 billion, more than half of which belonged to Tepper alone.

The Bottom Line

The given descriptions of intriguing trading adventures indicate that no trading style or strategy is similar to the other. Regardless of investment products, those traders always develop their proprietary trading plan to beat the market and manage potential risks. However, that they are considered the best traders does not translate to their 100% win rate. Reality has shown that even the greatest legends hardly avoid making wrong decisions and confront huge losses, not to mention the closing of various hedge funds due to their shrinking value and increased competition.

After things considered, the market is still unprecedented and no strategies can be permanently used. Having said that, the success stories of the legendary traders function as the giant shoulders on which fellow traders may stand and base their profitable plans.

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