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Fortunes made with leverage: what set the winners apart was knowing how to lose
Livermore, Soros, Paul Tudor Jones and Bill Hwang all used leverage. The difference between the ones remembered as winners and the ones who lost everything was position size.
Leverage lets you control more than you own. It multiplies gains and losses alike, so it rewards being right and punishes being wrong in the same proportion. Four famous traders show how the story ends depends less on the bet than on how much of yourself you put on it.
| Trader | Bet | Outcome |
|---|---|---|
| Jesse Livermore | Shorted the 1907 panic and the 1929 crash | Reportedly made about $100M in 1929; went broke several times; died in 1940 |
| George Soros | Shorted the pound, 16 September 1992 | About $1B profit; also took heavy losses in 1987 and 1998 |
| Paul Tudor Jones | Positioned for the October 1987 crash | Fund reportedly returned around 125% that year |
| Bill Hwang (Archegos) | Concentrated, swap-financed stock positions | Collapsed in March 2021; sentenced to 18 years in 2024 |
Livermore: right about the market, wrong about size
Livermore read the 1907 and 1929 crashes correctly and is said to have been one of the richest men in America afterwards. He also lost those fortunes more than once by betting too much on the next idea. Being right about direction didn't protect him from oversized positions.
Soros: the famous win came with a habit of cutting losses
Black Wednesday is remembered as the trade that broke the Bank of England. Less remembered: Soros's fund lost heavily in the 1987 crash and again in the 1998 Russian crisis (around $2B was reported). He got out when he was wrong, so those losses were survivable and the fund stayed in the game.
Paul Tudor Jones: defence first
Jones made his name calling the 1987 crash, yet his best-known advice is about protecting capital: decide where you're wrong before you enter, and keep losses small enough that you can keep trading.
Archegos: leverage without a limit
Bill Hwang built huge, concentrated positions through swaps with several banks, so no single bank saw the full exposure. When the stocks fell in March 2021, margin calls forced selling that fed on itself. Roughly $20B of his wealth reportedly disappeared within days, banks lost more than $10B (Credit Suisse about $5.5B), and Hwang was convicted of fraud in July 2024.
What this means for ordinary accounts
European brokers must publish how many retail CFD accounts lose money; the figures are typically 70–80%. Leverage turns small mistakes into account-ending ones.
- Decide your exit before you enter. A stop loss is a plan for being wrong.
- Size positions so a losing streak hurts but doesn't end you.
- Distrust results that depend on one perfect parameter: check they hold up nearby.
You can test all three on your own strategy: set a stop loss and a position size in the backtest, and on the Max plan run the plateau analysis to see whether the edge survives small changes.
Educational content, not investment advice. Historical figures are as reported by the sources listed and may vary between accounts.
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Buy SPY when the close crosses above the 200-day SMA, sell when it crosses below. Use 50% of capital per trade and an 8% stop loss.