Financial traders are masters of making money no matter what the market does. If the market is falling, then they sell, and when it rises, they buy. In this profession, as in every other one, some professionals became absolute masters of their craft, inspiring a new generation of young traders. Their stories are not for only entertainment, rather, they can provide crucial lessons and insights into the whereabouts of financial markets. In this text, we will explore the lives, philosophies, and legacies of these trailblazers – whose stories offer timeless lessons for traders today.
The pioneers – Traders who redefined the game
Let’s switch to these legendary traders and see why they were so influential. Among legends, there are well-known investors and traders like Warren Buffet, George Soros, and so on. Their stories are found in this list, explaining their mindset.
Jesse Livermore (1877-1940)
Jesse Livermore was a self-made financial trader during the great depression. His crowning achievement was profiting from the 1929 crash, earning over 100 million dollars. His mantra was, “cut losses short, let profits run”, which emphasized psychological discipline. Despite later dying penniless, his focus on emotional control and overall life story are amazing. Jesse Livermore’s life has been a popular reading topic for young stock traders as it offers both great success and failure and contains life-changing lessons about trading and life in general.
Michael Burry (1971-)
Michael Burry is a living legend who foresaw the 2008 housing collapse. He bet against subprime mortgages. This fascinating story was immortalized in the Big Short, which is a must-watch movie for all traders. His approach included meticulous research and a contrarian mindset. Michael Burry is a n example of independent thinking in an era of herd mentality. He was swimming against the current and proved everyone wrong, making millions in the process.
Ray Dalio (1949-)
Ray Dalio is the founder of Bridgewater Associates, which is one of the largest hedge funds. He built a $ 160-billion empire while employing macroeconomic hedging. His main philosophy is “Principles over ego”. Ray Dalio’s story teaches how traders can achieve success with systematic decision-making.
Cathie Wood (1955-)
Cathie Wood is the CEO of ARK Invest and is known for her disruptive tech investing. She called Tesla’s rise and delivered 150% returns in 2020. Her philosophy is “innovation solves problems”. She managed to modernize thematic investing in the tech era.
Steven Cohen
Steven Cohen is a High-frequency trading (HFT) pioneer and founder of Point72. He managed to achieve an average 30% annual return at SAC Capital. His philosophy reflects his approach: “information is everything else”. If we can learn something from Steven Cohen, it is how important it is to spend time researching the markets to make informed decisions and develop profitable strategies.
Key traits of legendary traders
While reading about stories of amazing traders is fascinating, it is more important to learn dear lessons from these stories. Here are key traits allowing all-time great traders to achieve enormous success and their legendary status:
- Discipline – Discipline allowed legendary traders to develop their mindset and strategies and achieve enormous success.
- Adaptability – Many traders achieved success because they adapted to the modern technology era, especially when it comes to HFT strategies.
- Risk management – Great traders are also great risk managers. When they lost they lost small and when they earned, they profited big just like Jesse Livermore.
- Resilience – Michael Burry is a great example of resilience as he trusted his analysis and vision.
- Vision – Cathie Wood had a great vision and achieved great success.
Lessons for modern financial traders
As we learn about the critical traits of legendary traders, we also find great lessons in their stories.
Great traders often blend strategies. For example, technical analysis coupled with Buffett’s fundamentals will give you a balanced edge. Modern trading is impossible without embracing tech. Traders should try to employ calculators and various useful tools to enhance their trading performance. By having a vision and consistency, traders can anticipate possible trends and jump in early to catch real opportunities, just like Cathie Wood.
Overall, traders can learn a lot from the legendary traders we have mentioned, and there are many more who we didn’t mention.
Best book and movie
The must-read book for great trading lessons is: Market Wizards; The New Market Wizards (Druckenmiller).
The movie to watch: The Big Short (Burry’s 2008 bet); Rogue Trader.
