Born 1954 · Global macro · Hedge fund manager
Paul Tudor Jones: Trading Rules and Principles
A macro legend whose rules are mostly about defence: protect capital, use the 200-day average and seek 5-to-1 trades.
Who they were
Paul Tudor Jones founded Tudor Investment Corporation in 1980 and became one of the best-known macro traders. He is famous for anticipating the October 1987 crash, a period documented in the film "Trader" (1987).
In interviews over the years he has repeatedly stressed defence, risk control and the use of simple trend filters over predictions.
Principles and rules
1. Defence first
The most important rule is playing great defence: focus on what you can lose before what you can win.
2. 5-to-1
Look for trades where the potential reward is about five times the risk, so you can be wrong most of the time and still profit.
3. The 200-day moving average
He has described the 200-day average as his metric for whether to be in or out of an asset.
4. Never average losers
Adding to a losing position is a way to turn a small mistake into a large one.
5. Reduce size when losing
When trading badly, cut position size until confidence and results come back.
Key lessons
- Risk control is the core skill.
- A simple trend filter avoids the worst markets.
- High reward-to-risk lets a low win rate work.
Strategies from this method
How to practise it
The 200-day moving average strategy page explains the filter. In Candlemind look for setups where the target is at least 3–5 times the stop and see how your score's reward-to-risk part improves.
Frequently asked questions
What is Paul Tudor Jones' 200-day rule?
He uses the 200-day moving average as a trend filter: assets below it are in a downtrend and he prefers not to own them.
What does Paul Tudor Jones mean by 5 to 1?
Seeking trades where the potential gain is about five times the risk.
Summaries and paraphrases of public books and interviews, for education. Not investment advice.