John Arnold: A Retired Natural Gas Trading King

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INSIGHTS INTO THE MINDSET OF SUPER TRADERS – Part 10

 

“Negativity is real, but consistent loss is optional.” – A.M.

 

Name: John Arnold

Year of birth: 1974

Nationality: American

Profession: Retired funds manager, investor and currently a philanthropist

 

Career

Raised in an upper-class home, in Texas, USA, John’s dad was an attorney and his mom was an accountant. While John was still a teenager, he lost his precious dad. In 1995, he earned a Bachelor’s degree in Economics and Mathematics from Vanderbilt University.

 

He started a great career at Enron, enjoying rapid promotion, owing to his ability to make huge profits for the company. There was a year in which he made 0.75 billion USD for his company and as a result, he was given 8 million USD as a bonus in that year. Since then, some people have called him “king of natural gas trading.’

 

After Enron folded up in the year 2002, John started his own firm with his bonus money. The firm, named Centaurus Advisors, LLC, became rapidly successful. Its assets grew to over 3 billion USD and it attracted some of the best traders around. The firm was based in Houston and it specialized in trading energy products. That was John’s edge.

 

At the age of 38, John suddenly announced his retirement from active funds management. At least, he’s extremely rich, for he’s invested a lot. He’s now doing what he also enjoys – philanthropy – donating to various interesting causes. John has touched many lives through his generosity and many more lives would be touched. As of March 2013, he was worth 2.8 billion USD. He’s married to Laura Muñoz and they got 3 kids.

 

Insights:

1. Some entered the trading world because they are in pitiful situations and they want to get out. There are also some people like John, who’re not from poor families. They entered the world of trading because the like the challenge and become richer than they ever thought could be possible.

 

2. John started his trading career while young, and he became a billionaire while still young. He retired in his late 30s. This emphasizes the fact that it’s better to start trading while young. John retired at the age of 38, but he gets richer and richer, because of his investments. He’s now engaged in activities that he likes. Are you working to survive, or are you really engaged in what you like doing, and as a result become financially free? You can retire any time you like, either early like John Arnold, or late like Stanley Druckenmiller.

 

3. You shall continue to make progress, irrespective of peoples’ criticisms. Some people now criticize John for what he currently does; yet he does what he thinks is right.

 

4. One of John’s secrets is that he specialized in what he could do best. If he tried other things, he mightn’t be as successful as he’s. Some people lose money as stock traders, while making money with futures. Some people lose money with options but make money with Forex. Some people lose money trading popular majors but make money trading exotic pairs. Some people make money with discretionary approaches but lose money with mechanical approaches, and vice versa. Please find out what markets/trading instruments work for you and stick to it.

 

5. It’s true that the market is risky, but continual losses are only a matter of choice. You can stop losing in the market if you want.

 

6. Look at his quote below, John liked to buy at troughs and sell at peaks: with great success. Please think about that.

 

This article is concluded with a quote from John:

 

"I try to buy things whenever they're trading below what [our] analysis shows to be fair value and sell things whenever our analysis shows that the forward curve is higher than our analysis of fair value."