Looking into the effective trading strategies employed by renowned traders is crucial. Traders Union has released a new report detailing how billionaire hedge fund manager Steven Cohen accumulated his immense $17.5 billion net worth through high-risk trading strategies.
Who is Steven Cohen?
Cohen is the founder of the now-defunct SAC Capital Advisors, once one of the most successful hedge funds in history, as well as the current CEO of Point72 Asset Management. Through aggressive and volatile trading techniques, such as combining fundamental and quantitative analysis to take large positions in stocks he believed were significantly undervalued, Cohen managed to produce massive returns for his funds and himself.
The TU report emphasizes Steve Cohen strategy value and notes, “Steve Cohen epitomizes the high-risk, high-reward style of trading that can result in either incredible success or dramatic failures.”
Steven Cohen’s background and early career
Born in 1956 in Great Neck, New York to a middle-class family, Cohen became hooked on trading even before finishing high school. He often used his own money to play in poker tournaments, proving himself to be a natural risk-taker. While attending the University of Pennsylvania’s Wharton School of Business, Cohen used $1,000 of his tuition money to open a brokerage account with the help of a friend, making his first forays into actual investing and trading.
After graduating in 1978 with an economics degree, Cohen landed an entry-level job in the options arbitrage division at Wall Street firm Gruntal & Co. His innate skill at trading was evident from the start, as he made the company $8,000 on his very first day and was soon earning profits of around $100,000 per day.
“Within a few years, Cohen was managing his own team of traders and overseeing a $75 million portfolio at Gruntal,” explained a TU analyst. “He demonstrated an almost uncanny ability to anticipate price fluctuations in stocks and profit from them.”
Establishment of SAC capital advisors
In 1992, Cohen struck out on his own at age 35, founding SAC Capital Advisors with $20 million of his personal funds. The hedge fund was remarkably successful, growing to manage $14 billion in equity capital by 2009. It focused primarily on equity investments based on deep research and analysis of market trends.
At its peak, SAC delivered unbelievable annual returns upwards of 70%, including massive gains for Cohen during both the 1990s dot-com bubble and the 2000 crash when he correctly shorted overvalued tech stocks. Such performances cemented his reputation on Wall Street as the “hedge fund king.”
However, SAC became embroiled in a number of insider trading allegations in the late 2000s. Though never criminally charged himself, Cohen’s firm pleaded guilty in 2013, paid $1.8 billion in penalties, and agreed to stop handling outside capital. With SAC effectively shut down under the weight of lawsuits and fines, Cohen was barred from managing other investors’ money for two years.
Rebirth with Point72 asset management
He re-emerged in 2016 with Point72 Asset Management, a $16 billion family office investing just Cohen’s personal fortune and that of some employees. Even today, he continues operating with the same manic energy and sky-high risk tolerance that defined his early trading days.
“Lots of ordinary investors could stand to learn a thing or two from Steve Cohen about embracing market volatility,” noted the TU report. “While we absolutely want to make clear that his alleged insider trading activities were unethical and illegal, Steve Cohen’s strategy and his appetite for risk and lack of fear in the face of uncertain markets underpinned his whole career.”
According to the TU report, some key lessons from Cohen’s trajectory include:
- Having the confidence to bet big on unconventional or unpopular ideas. Cohen made his name by buying stocks other funds wouldn’t touch or had left for dead.
- Combining reams of quantitative market data with strong qualitative opinions on company prospects. Cohen’s funds brought serious computing power to understanding trends.
- Assembling a talented team to vet ideas while still maintaining independence in final decisions. At his peak, Cohen oversaw hundreds of skilled investors and analysts.
- Accepting that losses are inevitable and sizing positions appropriately to avoid ruin. Though his bets were huge, Cohen understood the importance of diversification.
Of course, very few traders can replicate the decades-long run of insane returns that Propelled Cohen into the ranks of multibillionaires. But his fearless approach to navigating volatile markets has certainly led to one of the largest personal fortunes on Wall Street.
AMP Futures review
In addition to the analysis of Steve Cohen’s trading strategy, TU experts also evaluated the Cyprus-based brokerage AMP Futures, awarding it a mixed score. In TU’s latest assessment covering 383 brokerages, AMP Futures received an overall rating of 5.14 out of 10 and ranked number 87.
According to Traders Union expert Anton Kharitonov, AMP Futures is a “moderate-risk broker” that is more suitable for experienced traders rather than newcomers looking for passive income opportunities. He advised traders to thoroughly research the company’s pros and cons before opening an account.
AMP Futures overview
AMP Futures is the European arm of Chicago-based AMP Global, established in 2010 to serve clients outside North America. Regulated by the Cyprus Securities and Exchange Commission (CySEC), AMP Futures is a member of the Investor Compensation Fund which helps guarantee the safety of clients’ deposited funds. As noted here in a review published about the TU ranking of AMP Futures, the reviewer noted “Among the strong points highlighted in the review is AMP Futures’ membership in the Investor Compensation Fund which serves as a guarantee that safeguards a client’s interest in a dispute.”
Pros
- CySEC regulation
- Investor compensation fund membership
- No restrictions on trading strategies
Cons
- $100 minimum deposit
- No zero spread accounts
- No micro/cent accounts
- No bonuses or special promotions
- No PAMM investment accounts
Expert analysis
In the review, Kharitonov says AMP Futures positions itself as a reliable broker for active traders rather than passive investors. The $100 minimum deposit and spreads from 1 pip make it better suited for experienced traders. The lack of PAMM accounts, social trading, and investment portfolios leaves little opportunity for passive income. The only way to earn commissions is through their affiliate program for referrals.
Kharitonov notes that AMP Futures provides a free demo account with unlimited validity for traders to test the platform. Their Cyprus regulation and Investor Compensation Fund membership provide reassurance that clients can get compensation in the dispute.
The AMP Futures website makes it easy to find key information about account types, platforms, and assets quickly. However, more high-quality market analysis, educational resources, and news offerings would be beneficial.
Trading conditions and platforms
Traders Union analysis noted that as an active trading-focused broker, AMP Futures does not offer any passive investment products like managed accounts. Their accounts are tailored toward frequent traders:
- Minimum deposit: $100/€100/£100.
- Maximum leverage: 1:100.
- Spreads: from 1 pip.
- Platforms: MT5, StereoTrader 2.5, web terminal.
- Account types: demo, standard, corporate, Islamic.
- Assets: 10 global futures exchanges, Forex, metals, energies, indices, stocks, crypto.
When trading futures, exchange fees may apply on top of spreads starting from 1 pip. Support is available 24/5 in multiple languages. Based on AMP Futures’ published policies, TU experts determined spreads start at 1 pip, with futures trades typically charged additional exchange fees/commissions per lot traded. No other trading fees apply, and withdrawal fees are also absent.
Conclusion
The Traders Union report insightfully analyzes Steven Cohen’s trading strategies, highlighting his incredibly successful journey from a middle-class upbringing to becoming a hedge fund icon with a net worth of $17.5 billion. His high-stakes, high-payoff approach integrating fundamental and quantitative analysis, along with seizing undervalued assets, has been integral to his financial triumph. Despite controversies, Cohen’s methods provide useful takeaways regarding confidence, data analysis, team leadership, and risk mitigation.
Additionally, the report evaluates the Cyprus-based brokerage AMP Futures, praising its strengths as a regulated broker suitable for seasoned traders, while noting drawbacks for those prioritizing passive income potential or low-cost investments. In summary, the analysis offers an illuminating profile of Cohen’s strategies and ascent, supplemented by a review of AMP Futures’ offerings for different categories of investors.
About the author
The article was authored by Peter Emmanuel Chijioke, a seasoned analyst at Traders Union.
