10 Trading Tips from Paul Tudor Jones - The Legend Who Called the 1987 Crash
Paul Tudor Jones is one of the most successful hedge fund managers and traders of all time. Born on September 28, 1954, in Memphis, Tennessee, he rose to prominence through his exceptional trading skills, macroeconomic insights, and bold market predictions.
While most traders know him for calling the 1987 Black Monday stock market crash, he’s as relevant as ever in 2025.
Early Life and Career
Paul Tudor Jones graduated from the University of Virginia (UVA) in 1976 with a degree in economics. He began his Wall Street journey as a clerk on the trading floor before moving on to trade cotton futures at the New York Cotton Exchange.
His early success caught the attention of industry veterans. And by 1980, at the age of just 26, he founded his own firm -- Tudor Investment Corporation. For comparison, George Soros founded the Quantum Fund at the age of 42.
The creation of Tudor was key in Jones' evolution towards becoming a Wall Street icon with over $12 billion in assets under management (AUM).
Black Monday and Market Mastery
As noted above, Jones gained widespread fame for predicting and profiting from October 19, 1987 stock market crash, known as Black Monday.
The S&P 500 fell 22.6% that day, the largest one-day decline in US stock market history.
Using his deep understanding of market cycles and technical analysis, Jones shorted the market ahead of the crash, reportedly tripling his fund’s money while countless others suffered catastrophic losses. Many never came back.
Jones’ feat solidified his reputation as a trader with an uncanny ability to anticipate major market moves. This big market call chronicled in the documentary Trader (1987), which further cemented his legacy.
Trading Philosophy
Jones is known for his macro trading approach. He focuses on global economic trends, interest rates, currencies, and commodities.
He famously said, "The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge."
To Jones, knowledge is power.
His strategy often involves taking calculated risks, cutting losses quickly, and letting winners run—a disciplined approach that has kept him at the top of the game for decades.
Most beginning traders find taking losses fast difficult. But Jones was never your average trader.
Net Worth, Wealth, and Influence
Paul Tudor Jones has an estimated net worth exceeding $8 billion, making him one of the wealthiest individuals in the finance industry. His firm, Tudor Investment Corporation, manages over $12 billion in assets and remains a powerhouse in the hedge fund world.
Jones is also a pioneer in using quantitative analysis and has adapted his strategies over the years to incorporate modern tools and technologies. And contrary to popular belief, Jones is not just another “80’s guy.” He’s a major proponent of digital assets like Bitcoin.
In 2021, he told CNBC that Bitcoin is "like investing early in a tech company."
If you notice, Bitcoin was under $13,000 then. It eventually exceeded the $100,000 mark.
Philanthropy
Beyond his adventures in the trading world, Jones is a committed philanthropist. In 1988, he co-founded the Robin Hood Foundation, which bills itself as “New York City’s largest poverty-fighting philanthropy”. The organization has raised hundreds of millions of dollars and is known for its data-driven approach to charity, mirroring the analytical mindset Jones used to trade stocks and commodities.
He’s also been involved in conservation efforts and education initiatives, including supporting his alma mater, UVA.
Personal Life and Legacy
Jones is married to Sonia Jones, and they have four children. He’s known for his competitive nature—not just in markets but also in sports like boxing. Fun fact: Jones was a welterweight boxing champion at UVA.
His larger-than-life personality, combined with his intellectual rigor, has made him a mentor to many aspiring traders and a frequent speaker at financial conferences, including his own Robin Hood NYC events.
Here’s a video of him speaking with the equally-legendary Stanley Druckenmiller
In recent years, Jones has remained vocal about economic issues, warning about inflation, fiscal policy, and the rise of cryptocurrencies, which he has embraced as an inflation hedge (he’s been a big Bitcoin bull). His ability to evolve with the times while sticking to core principles has kept him relevant in an ever-changing financial landscape - unlike most of his contemporaries from the good old days.
So here are 10 trading tips derived from Paul Tudor Jones’ publicly available statements, interviews, and documented philosophies.
These reflect his approach to markets, risk management, and success as a trader:
1. Focus on Risk Management First
"The most important rule of trading is to play great defense, not great offense." Jones emphasizes protecting capital over chasing gains. He believes surviving losses is key to long-term success.
2. Cut Losses Quickly
"If I have positions going against me, I get right out; if they are going for me, I keep them." He’s known for exiting losing trades fast to limit damage, a cornerstone of his discipline.
3. Let Winners Run
Jones advises holding onto profitable trades as long as the trend supports them. He’s said, "I’m always thinking about losing money as opposed to making money," but when a trade works, he maximizes it.
4. Understand Market Cycles
His prediction of Black Monday showed his grasp of historical patterns. He studies economic cycles and technical signals, urging traders to "know where you are in the cycle" to anticipate big moves.
5. Stay Hungry for Knowledge
"The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge." Jones credits his edge to constant learning.
6. Adapt to Changing Markets
"Markets are never wrong—opinions often are." He’s evolved from cotton futures to crypto, stressing the need to adjust strategies as conditions shift.
7. Trust Your Instincts, Backed by Data
Jones blends gut feel with rigorous analysis. He’s noted, "I believe the very best money is made at the market turns," relying on intuition honed by experience and research.
8. Don’t Overleverage
"Don’t be a hero. Don’t have an ego." He warns against taking oversized risks, a lesson from his early career when he learned humility after a big cotton trade loss.
9. Be Contrarian When Warranted
His Black Monday short was a contrarian bet against the crowd. He’s said, "The crowd is usually wrong at the extremes," encouraging traders to look for opportunities others miss.
10. Maintain Emotional Discipline
"Trading is a passion, but you’ve got to keep it in check." Jones stresses staying calm under pressure, avoiding emotional decisions that can wreck your P&L and trading psychology.
7 Tools Paul Tudor Jones Used
Here’s what’s commonly attributed to his methodology:
1. Moving Averages
Jones is known to have used moving averages, particularly the 200-day moving average, as a key indicator for identifying long-term trends. He’s referenced it in interviews as a simple yet effective way to gauge market direction and spot potential reversals. For example, he’s noted that a break below the 200-day moving average often signals trouble in a bull market. Moving averages are also widely used by T3 contributors like Sami Abusaad and are often discussed in our Virtual Trading Floor® trading rooms.
2. Elliot Wave Theory
He’s cited as an adherent of Elliot Wave principles, which analyze market cycles and investor psychology to predict price movements. This isn’t a traditional "indicator" but a framework he used to interpret momentum and turning points, especially during volatile periods like the 1987 crash.
3. Momentum Indicators
Jones likely employed tools like the Relative Strength Index (RSI) or similar momentum oscillators to assess overbought or oversold conditions. His ability to anticipate the 1987 Black Monday crash suggests he was attuned to momentum shifts, possibly using RSI divergence or rate-of-change metrics.
4. Volume Analysis
Volume was a critical component of his trading. He watched for unusual volume spikes to confirm trends or signal exhaustion. This ties into his focus on market psychology—volume often reveals the conviction behind price moves.
5. Support and Resistance Levels
As a technical trader, Jones relied on key price levels to determine entry and exit points. He’s spoken about watching how markets behave at psychological levels (e.g., round numbers) or prior highs/lows, using them to time trades.
6. Intermarket Analysis
Beyond single-chart indicators, Jones looked at relationships between asset classes—like bonds, currencies, and commodities—to inform his equity trades. For instance, he famously shorted the market in 1987 partly based on bond market signals and historical parallels to the 1929 crash.
7. Sentiment and Contrarian Signals
Less a formal indicator and more a gut-driven tool, Jones often gauged market sentiment. He’d look for extreme bullishness or bearishness (e.g., via surveys or positioning data) as a contrarian cue to go the opposite way.
Controversies and Criticisms
But is Paul Tudor Jones a perfect little angel?
No. He has faced his share of criticism, including:
Aggressive Risk-Taking
Some critics argue that Jones’ success, like his Black Monday windfall, relies on high-stakes bets that could just as easily backfire. Detractors say his style—shorting markets or leveraging macro trends—can glorify reckless speculation rather than disciplined investing. Plus, the average trader may fall into a trap thinking they can emulate Jones, who has vastly superior access to information and capital.
Elitism and Wealth Disparity
Jones’ billionaire status and lavish lifestyle (including owning a $71 million estate in the Florida Keys) have drawn ire in the context of his Robin Hood Foundation work. Critics, argue it’s hypocritical to fight poverty while amassing shocking amounts of personal wealth, calling it "philanthropy as PR." Though supporters would say that regardless of his lifestyle, Jones’ philanthropic efforts are doing good for the world.
Controversial Public Statements
In a 2013 panel at the University of Virginia, Jones suggested women traders lose focus after having children. The remark sparked backlash, with critics labeling him out of touch.
Market Manipulation Allegations
Though never formally charged, some skeptics have speculated that Jones’ outsized market moves—like his 1987 crash play—could influence prices in ways that border on manipulation. Conspiracy-minded critics question how much his "predictions" are self-fulfilling due to his fund’s scale, though no hard evidence supports this.
Crypto Flip-Flopping
After embracing Bitcoin as an inflation hedge in 2020, Jones faced flak from traditional finance circles for flip-flopping after earlier skepticism about speculative assets. JP Morgan’s Jamie Dimon also came under criticism for this type of about-face. But this criticism seems especially weak given how much Bitcoin has run up in recent years. Jones was late - but still did quite well with Bitcoin.
Tax Avoidance Scrutiny
Like many hedge fund titans, Jones has been indirectly criticized in broader debates about tax loopholes. His wealth, tied to carried interest taxed at lower rates, has fueled accusations from activists that he benefits from an unfair system.
Environmental Disconnect
Despite his conservation efforts, such as supporting the Everglades Foundation, Jones has been called out for owning multiple properties and private jets, which contribute to a large carbon footprint. Environmentalists argue this undercuts his green credentials.
Overreliance on Macro Guesses
Some analysts critique his macro-driven approach as overly dependent on correctly calling economic shifts, which is off-the-charts difficult.
Cult of Personality
Jones’ larger-than-life image, bolstered by Trader and media hype, has led some to accuse him of cultivating a mythos that overshadows substance. Critics argue his historic fame and notoriety for calling the 1987 crash outstrips his actual influence on modern markets, where quant funds and algorithms now dominate.
Are you a fan of Paul Tudor Jones? If so, we hoped you learned a few things in this deep dive into this legendary trader's interesting life and approach to markets.
How to Learn About Moving Averages
If you’d like to get a better understanding of how moving averages can be used to find winning trade ideas, check out Scott Redler’s free eBook “The Ultimate Guide to Moving Averages.”
