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2020-12-24 • Updated

Know Your Heroes: Successful Traders of Modern Era

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We bet you’ve heard many times that a great journey starts with a small step. What if we say that success is just a journey, not a final destination. But where you have to go to manage your path to the heights? Plunge into the most exciting stories of success to learn from the insights.

John D. Arnold: from an analyst to a billionaire

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Net worth $3.3B

The Beginning

John Douglas Arnold was born in Dallas, USA, in 1974. His family is a regular American high-middle class one: his father was a lawyer, and his mother was an accountant. John was a young genius. How otherwise you can describe the fact that he entered Vanderbilt University and graduated in mathematics and economics in just three years!

Work

His trading journey started quite early. As a kid, Arnold bought hockey cards in Texas and sold them in Canada. Being a postgraduate, he went to earn money on Wall Street in 1995. His knowledge allowed him to begin his trading career in the energy giant – Enron Corporation, where he worked as an oil analyst. But Arnold’s ambitions were high enough to become an assistant trader. He showed an excellent performance in this position. At the age of 21! He kept up with the times, and in his work, he actively used modern technologies of the Internet and algorithmic trading.

Of course, such outstanding profitability couldn’t go unnoticed. The higher management of Enron entrusted him with trading natural gas derivatives, in addition to oil, and then he had a promotion.

How did it Come?

Everything went well for the trader. In 2001, Arnold made $750 million for the company. He received a bonus of $8 million for this outstanding achievement. However, there was the flaring scandal around Enron’s endeavours to conceal losses through offshore companies, which played a part in the company bankruptcy. This event and the related fraud scandal shocked the US energy sector at that time. Market volatility lowed extremely and left traders no opportunities to earn.

John Arnold managed to take advantage of the crisis. He played on his own and created a hedge fund called Centaurus. Due to his analytical skills, the trader could predict that the crisis was resolved by itself. So, energy prices went up, and market volatility also increased sharply – Arnold and his company had already been one of the most skilled players in the game.

What’s Now?

Despite Arnold’s exceptional abilities and annual company returns of more than 150%, in 2012, when he was just 38, he decided to close the fund. Together with his wife, one of the youngest billionaires in the world opened a private foundation. It focuses on education, healthy, tax policy, and criminal justice.

Secrets of Success

When the journalists asked Arnold about his life journey and lessons that he learned, the famous trader revealed three common truths:

  1. Be careful with money.

    Arnold’s parents taught him to appreciate money no matter its quantity. As you may remember, his mother was an accountant, and she was always looking for coupons and deals. Can you imagine?

  2. Think about the downside of things.

    He confessed that the Enron collapse showed him the necessity of proper control in the places. All the business lines should be well-run for the impressive performance of the whole company.

  3. Wealth is very fleeting.

    There is always a difference between how you’re doing and what’s on your paper. Arnold said that he might have been doing extraordinarily well, but his actual money was tied up in Enron stock and options.

John W. Henry: from a farmer to a billionaire

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Net worth $2.2B

The Beginning

John William Henry II was born in Quincy, USA, in 1949. His parents were soybean farmers, and he spent his young years in the green plains of Illinois and the brush land of Arkansas, where he lived with his grandparents. When he was 15, the family moved to California due to John's asthmatic condition. He entered the University of California, where he majored in philosophy, but failed to graduate because he played on the road in two bands.

Work

When John was 25, he took over his family's farm after his father's death and began to dive deep into hedging techniques. Henry started trading corn and soybean futures to learn more about the basics of hedging the price risk of holding an inventory of these commodities.

He worked without formal associations to Wall Street and managed to have a unique journey in the world of trading. A dropped out boy from a farmer family, in 1980, he invented a mechanical trading system based on identifying and following price trends. This mechanism allowed a trader to observe past data to see whether a real-money trade could work or not.

In 1981, after the system had been tested, Henry found John W. Henry & Company, relying on his impressive expertise and money earned on trading.

How did it Come?

Since establishing his company, John developed many innovative investment programs in futures, foreign exchange, and fixed income. He won acclaim for his systematic approach to trend following.

From his hedge fund trading, Henry became a multi-millionaire. He was worth $840m before the credit crunch hit in 2007, which influenced some of his company branches. The company tried to recover after the crises but to no use. In 2012, the John W. Henry & Co firm stopped managing their clients' assets.

Although he built his fortune as a trader, Henry's journey to success wasn't over. Even though he always had a knack for numbers that reflected in his approach to trades. He also had a passion for baseball. Throughout his career in finance, he owned several baseball teams.

In 2001, together with his partner, Henry established a sports company called New England Sports Ventures. The company is called Fenway Sports Group now, and it owns the Boston Red Sox, 80% of the New England Sports Network, which also carries the NHL's Boston Bruins, Fenway Park, Fenway Sports, various real estate properties surrounding Fenway Park, and, last but not least, Liverpool Football Club.

What's Now?

Being a successful, intelligent billionaire, now John Henry is retired from trading and busy being a principal owner of FC Liverpool. In interviews, he said that it's a great pleasure for him to interact with fans. Now he is happily married, and together with his wife, he takes an interest in sport, journalism, and science.

Secrets of Success

During his journey, John found some universal rules, which help him to be so productive:

  1. Discipline is more important than genius.

    John Henry is respected for his intellect. He has a powerful ability to see opportunities for profit where others don’t. However, it would be impossible to create such a brilliant career with neither degree nor rich parents and having no proper self-control as well.

  2. Everything in life has trends.

    To understand what move is next, you should consider the past. John believes that many aspects of life can be easily predicted if you conduct a profound study on the topic of your interest.

  3. Constantly look for ways to create value.

    Creativity itself is less worthy than the ability to show the results. Performance is always more important than capability. John Henry used to say that and also proved it in his own work.

Bottom Line

As you can see, no matter how wealthy your family is or how well your exam results. There’s hope for everyone who is ready to develop their trading skills and train a lot. Inspire, learn, trade, and achieve with your reliable broker.

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