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5 Trading Legends and what we can learn from them?

In trading, one of the most important things to have in mind and know is that there is no holy grail. Your hard work, trading style, money and risk management, and trading psychology are something that can put you ahead of very hard competition in this world.

People mentioned in this article are not Gods, they were not born as successful traders. They became successful. They’ve put in the time and work needed in order to achieve their goals and become who they are now. Nothing was given to them for free. They earned it, and gosh they made some bucks doing so.

I will try to list some of the trading legends I personally admire and respect, I will not be listing them in some specific order. We can all learn a lot from them.

1. Jesse Livermore

Jesse Livermore, courtesy from Twitter

One of the first legends in our world, Mr. Livermore is truly an inspiration to all traders aiming for great returns. He became well known to us, a new generation of traders, from the book named “Reminiscences of a stock operator”. I will not be wasting any words on that trading classic, if you have not read that book you lost a lot of advice from the man who is the king of the game. Go grab the book and enjoy, thank me later!

His unique trading approach consisted of pure price patterns watching. He was trading in the pre-Great Depression era and continued to do so afterward. The trading style he used was pure gold, it can really be used today with some minor adjustments.

Since he did not have access to charts in his time, he was solely trading price as I mentioned. He had his notebook full with price movement written down which he closely paid attention to. The simplest example of his unique trading style was trading the trend and stocks that only were moving in a trend.

For example, his stock pick was ranging from $70 and up to $80 and back down to $70. His actions would only be taken if the stock itself breaks a significant level, for example, $70, and continues to drop. He will short sell the stock at $68. If the stock, for example, went to $70 and continued to rally higher, he would enter at $72 and keep it until the previous high is reached, which is $80. He will then hold and wait to see whether or not that resistance at $80 is about to be broken or not. If yes, he will be adding to his position and continue monitoring the stock regularly.

His unique trading style was developed so it can suit his trading needs and style, his style was his own Holy Grail. Learn from him by making a unique trading plan and style which will only suit you.

2. Richard Dennis

Richard Dennis, courtesy of Google

Richard Dennis managed to turn his $5000 into more than $100 million in the 1980’s futures market and everyone on Wall Street, including his friend and trading partner William Eckhardt, thought that he has some inner power or gift which helped him amaze such great wealth.

That gave Richard an idea, and he bet with William that everyone can be a great trader, and “Turtle Traders” were born. The rest is history. Dennis managed to prove everyone wrong and proved that you are not born as a trader, you are made as a trader.

His unique trading style of catching the trends and the breakouts in the futures markets proved correct and his turtle traders made some significant returns. It is rumored in lots of trading forums that his system still works, I personally didn’t want to dig deeper on this and find out what the system was. I wanted to believe that a unique approach to trading and keeping things simple is what will make you win in the long run. Do you agree?

3. Stanley Druckenmiller

Stanley Druckenmiller, courtesy of Google

Everyone in trading knows about the Soros trade against GBP in the ’90s, which forced Britain to leave EER and which made Soros a significant return of 1 billion dollars. Mr. Druckenmiller was the man behind the trade, he was the one that spotted that the Bank of England had huge currency reserves in foreign money and was not able to support the pound adequately.

Mr. Druckenmiller is also known for his magnificent fund which closed its doors in 2010, and which since the opening had an annual return of 30%. Duquesne Capital was opened in 1981 with just one million dollars and was closed in 2010 with $12 billion in assets.

Mr. Druckenmiller firmly believes that for one to succeed in trading he needs 2 things, technical analysis, and liquidity. He believed that if a trader thinks he is right, he should go big(which doesn’t mean go all in, don’t get him and me wrong). Though he was familiar by betting big when an opportunity was presented, he was tremendously good at his money and risk management, which ultimately earned him his place in the Trading Hall of Fame.

4. David Tepper

David Tepper, courtesy of Wikipedia

Mr. Tepper, a former Goldman Sachs bond analyst is considered one of the richest and most successful hedge fund managers in the world. And with an estimated net worth of almost $15 billion, when he talks, we should all listen.

When he was asked by a journalist to briefly explain his career success, he said that everything he has now is owed to two things he did in his trading and investing business – heavy amounts of research and a dose of luck. I certainly believe that luck didn’t have much to do with Mr. Tepper’s success, but if he says that luck is one of the factors who am I to contradict that.

Once again, like all the traders mentioned above, a unique trading plan and unique strategy proved to be the core principle that will either take you to enormous success or a complete bust.

5. James Simmons

James “Jim” Simmons, courtesy of Google

With an estimated net worth of approximately $23 billion, Mr. Simmons and his Rennaisance Technologies hedge fund are synonyms when mentioned in the trading world, don’t need further introduction. His Medallion Fund had to close its offices for a simple reason, he had such returns that the capital it had under management couldn’t enter a position without moving the price significantly.

With an estimated return per anum of about 66%, no one can even come close to Mr. Simmons’s trading and investing approach. Not even a mile close. His unique trading style consists of heavy statistical analysis of price data and price patterns.

His core concept consisted of couple of very simple, down-to-earth, advices:

  • Always perform backtesting of your trading strategy and style.
  • Always trade your system with discipline.
  • Trade in a variety of markets for a larger return potential.
  • You don’t need a high win rate to make large returns.