Hedge Fund | Great Traders

One of the trading techniquesI use, is one that Paul Tudor Jones (the legendary trading multi-billionaire) confided in a video years ago that he uses to make a lot of money. The technique - Elliott Wave. Now, Elliott Wave trading is not everyone's cup of tea but he revealed he uses it in the video and then, promptly realising that he was giving away his secrets, bought up all the available copies and stopped its distribution!

Paul Tudor Jones has been featured in several books, notably Jack Schwager's Market Wizards. Amongst his notable trades was Black Monday way back in 1987.

He correctly predicted and profited handsomely from the largest single-day U.S.stock market decline (by percentage) ever. Jones reportedly tripled his money, making as much as $100 million on that trade when the Dow Jones Industrial Average plunged 22 percent.

In the weeks leading up to Black Monday, many traders were concerned about the market. Some also recognized the danger of portfolio insurance, which was partly responsible for the magnitude of the fall.

Consequently, many had short positions going into Black Monday or advised their clients to get out of the stock market shortly before it happened, so Jones wasn't unique in predicting the crash. However, Jones deserves the accolade of a great trader because Black Monday was such a momentous market event and he was the person who made the most money from it.

Mentioning great traders, John Paulson's bet against sub prime mortgages

John Paulson is the famous hedge manager who correctly predicted the sub prime mortgage crisis and took enormous profits from it when so few realised what was going on with the economy.

His trade made his hedge fund $15 billion in 2007 alone. It propelled him from relative obscurity to stardom and his hedge fund to become the third largest in the world. Just this one trade and the most cataclysmic crash in over seventy years moved him into the ranks of super successful traders making billions. Also, he was almost unique in taking this trade, the majority of other players had become believers that was in fact no crisis looming

The next amongst great traders has to be Jesse Livermore who called the 1929 crash.

Jesse Livermore is a legendary speculator from early in the 20th century and he is famous for correctly predicting both the 1907 and 1929 stock market crashes.

For his 1907 trade, Livermore made $3 million, which is equivalent to almost $70 million today. After his 1929 trade, he was worth $100 million, which is equivalent to well over $1.2 billion today.

Where Livermore was different to the majority of present day traders, he did it without hedge fund money. That said he made a lost several fortunes during his trading life time.

Livermore was considered a pioneer in the art of speculation and top traders still swear by the Reminiscences of a Stock Operator, a book based on his trading philosophy and career.