The best way to learn anything is from experience, and where better to take inspiration from than the legendary traders whose historic and famous trades have landed them in some of the top trading books available today. We take a look at some of the greats and the moves they made to earn them a place in history.
The man who inspired the trader’s bible – Edwin Lefevre’s Reminiscences of a Stock Operator – Jesse Livermore is a legendary trader who made millions during the crash of 1929, also known as the Great Crash. He is widely regarded as the greatest trader who ever lived after taking short positions before the 1906 San Francisco earthquake and just before the Wall Street Crash in ’29.
Livermore began his trading career at just 14 years old in Boston before heading to Wall Street. Here, he experienced great successes as well as failures. Livermore made more than $100million betting against the stock market, earning himself the name Great Bear of Wall Street.
Making remarkable investments and trades over the years, it is believed George Soros made up to $1billion in one day after betting $10 billion against the British pound – it has been called one of the greatest currency trades in history and earned him the title of the man who broke the Bank of England. The brave-yet-well-timed bet against the Bank of England in 1992 cost around £3.3billion – becoming known as Black Wednesday.
He launched his hedge fund in the early 1970s, Soros Fund Management (later the Quantum Fund), which reportedly boasted average annual returns of more than 30% per year and on two occasions reported gains of over 100%. In 2018 Soros ranked 60th on the Forbes 400 list of the richest people in the world.
Paul Tudor Jones
Known as the man who shorted the Black Monday 1987 crisis (the largest single-day US stock market decline by percentage ever), he and his friends predicted the crash was coming for some time and ultimately managed to make a profit of 62% by holding on to short positions – making a $100million profit that year. When going into the market, he says a sound plan is needed.
It was a trade which was amazing to walk away from with a fortune, especially when so many suffered great losses.
Hedge fund manager John Paulson made what was called the greatest trade ever, by making $15billion by shorting the US housing bubble in 2007. He foresaw the crisis and his fund invested in credit default swaps on securitized mortgage debt.
Analyzing and planning are what seem to be the key elements behind the successes of these traders – showing that sometimes taking a risk can have great rewards.