Steven Cohen: Profitable Investment Strategies

Published: July 29, 2020 by Andrew

Creating an investment fund that makes an average profit of 30% per year for 20 years is an incredible achievement, yet Steven Cohen has succeeded and is only one of his firsts as an investor.

This guide aims to describe the life and investments of this great trader, but also to analyze his strategies in order to “copy” them.

The first choice to make is the trading platform needed to invest. An online broker like eToro, for example, is ideal for trading even starting with small capital, because it is safe and there are no commissions to pay.

Who is Steven Cohen

Steven Cohen is an American investor born in 1956. He has been in charge of managing some hedge funds thanks to which his estimated assets have reached over 14 billion dollars.

Cohen is of Jewish origin although he grew up in New York in a large family with seven brothers and sisters.

As a young man he loved poker and liked to bet, a skill that later evolved in investing in the markets.

Graduating in economics from the Wharton School at the University of Pennsylvania in 1978, he had opened a brokerage account with $ 1,000 of his tuition fees.

Later he went to work as a trader at Gruntal & Co., where he earned an average of $ 100,000 a day until he had his own portfolio and a team of traders available.

Steven Cohen: Investment funds

Cohen created one of the most profitable hedge funds ever, the famous SAC Capital Adviser, now closed due to an investigation by the SEC (Securities and Exchange Commission) for insider trading.

Steven Cohen has never been personally accused, but the company suffered a conviction for using private information to benefit, and had to return capital to investors and pay a $ 1.8 billion fine.

The SAC was officially closed in 2016 and Cohen was unable to manage other people’s money for 2 years but in the meantime he had founded Point72 Asset Management, an investment fund based in Stamford Connecticut.

Steven Cohen: Which platforms to use to invest?

When following the strategies of a professional trader you need great platforms, which have all the tools and indicators necessary to make a correct technical analysis.

CFD Brokers are commission-free, regulated and secure platforms that allow you to invest in any market, from Indexes to Shares, to Cryptocurrencies, etc.

These contracts (CFDs) allow you to aim both upwards and downwards, the possibility of going short (i.e. aiming downwards) is fundamental to follow Seven Cohen’s strategies in a serious way.

In addition, the absence of commissions allows you to calculate profits clearly, without additional costs.

Invest with CFD Brokers

These brokers are not all the same, you need to check some features to choose the safest and most reliable CFD Brokers:

  • They don’t have to charge commissions
  • They must have a CONSOB, CySEC or equivalent license, to guarantee the security of the funds deposited
  • They must offer the opportunity to invest both upwards and downwards (Short Sale)

We have selected two of the best commission-free trading platforms available on the market: eToro and ForexTB.

eToro: Automated Trading and Intuitive Platform

eToro stands out above all for the intuitive platform it offers and for a revolutionary automated trading system.

This broker is regulated and licensed and its reliability can be confirmed by over 7 million active users.

To invest, just choose an Index, a Share, a Commodity, etc. click on the “Invest” button on the platform, decide how much to bet on the operation and whether to buy or sell (short).

The automatic investment system that made this Broker famous is called Copy Trading and allows you to copy the operations performed by the best traders in the world (on eToro).

Thanks to this functionality you can:

  • Get the same returns as more experienced traders
  • Learn the strategies of these big investors without any expense and without having to take expensive courses

Here are the steps to follow to use Copy Trading:

  • Register on eToro with the link at the end of the review
  • In the “Copy People” section choose the traders to copy, based on their returns
  • With a click, Copy Trading will copy the operations of the chosen traders to your account

So you will get the same returns as these trading experts (in proportion to the investment), without doing anything.

With this tool even a novice investor can make money as a trading expert, because he copies his trades!

Here is how much these Top Traders earn that you can copy on eToro:

Steven Cohen copytrading

Click here and choose which traders to copy

Both “automatic trading” and “manual trading” can also be tested on a free Demo account, without taking risks, with virtual money.

Click here to sign up for free

To learn more, read our full eToro review.

ForexTB: Trading course and Operational Signals

ForexTB has become very popular with investors because it seeks to increase its users’ profits with training and operational support.

To try to please every trader, ForexTB has made available two trading platforms, both free:

  • The Web platform, very simple and usable by any browser and device without downloading any software
  • Metatrader 4, the most used trading software in the world, is very technical and full of customizable tools and indicators
Click here and choose which platform to use

The CySEC authorization allows you to negotiate across Europe securely.

To increase the profits of traders, this Broker has made available one of the best trading courses available on the market, an ebook that defines the basics of online trading and technical analysis in a very detailed way and can be downloaded for free:

Click here and download the trading course for free

To optimize the traders’ operations, ForexTB sends free Trading Signals to all investors. These indications are studied by Trading Central and have a profit rate of 70%.

To receive free trading signals click here

Read our ForexTB review for more information.

Steve Cohen: Where does he invest?

In 1992, Steven Cohen launched his hedge fund: SAC Capital Advisors.

Founded with Cohen’s own $ 25 million in cash, the fund initially used an aggressive trading approach.

Securities positions were held for a few days or, in some cases, for a few hours, with short-term trading strategies.

Already in 1999 SAC was trading regularly 20 million Stocks per day. By 2006, the company’s trading accounted for 2% of all stock exchange trading activities.

Over the next two decades, SAC expanded its strategies, using both bullish and bearish equity portfolios, reaching an average yield of over 30% per annum for its investors.

If you try to calculate the compound interest of an investment that makes 30% per annum for 20 years, you will get a better idea of what figures can be accumulated with a similar yield.

Here are some investments made by Steven Cohen:

  • In 2007, SAC took a $ 76 million position in Equinix. After the company made positive profits a month later, its stock value rose 32%.
  • In early 2012, Cohen invested $ 26.7 billion in Ardea Biosciences. When AstraZeneca made an agreement to buy the company three weeks later, the acquisition increased Cohen’s position on Ardea to nearly $ 40 billion.
  • SAC took long positions in Whole Foods in 2009 and 2010 for $ 49 million and $ 78 million respectively. Both times, following favorable operational changes within the supermarket chain, the share price skyrocketed.

Steve Cohen: Investment Strategies

Steven Cohen is considered one of the most famous and profitable traders of this century.

At the end of the 90s it was bullish on dotCom and made 70% of profits, then sold short after the bubble burst in 2000 and made another 70% thanks to the collapse.

His ability to adapt to the current trend has allowed him to accumulate a real fortune.

Obviously the forecasts have not always hit the spot, the speculative fund has also suffered significant losses but on balance the investments made have always brought a positive balance.

Steven Cohen Trading

This trader has become legendary and over time has become part of the 100 richest people in the world.

Steven Cohen’s trading style is based on never going against the trend, just the opposite of John Paulson’s style.

If a stock makes new highs, it is necessary to follow the trend while it lasts. If, on the other hand, the shares mark new lows, we must continue to sell short, not try to stop the fall but take advantage of the collapse.

Trading information is important but you cannot know the real reasons that cause a trend, so you can only ride it.

Even during the DotCom bubble, Steven Cohen was not the first to reverse but waited for the reversal to be confirmed and in the end, despite some losses left “on the field” he made an incredible profit from both the upside and the downside.

Cohen’s philosophy says:

Do not sell short on a new high and do not buy on a new low.

Steven Cohen: The Secret is Team Trading

Steven Cohen often says that he could not achieve such results if he worked as a “lone wolf”.

The main reason I earn so much is that I have created an extraordinary group

Cohen often repeats.

The high returns are the result of collaborations between extraordinary traders, each with its own peculiarities and skills.

A hedge fund needs experts in every sector and you cannot be good at everything. So for Cohen, a good fund manager must be able to work in a team and deal with the opinions and insights of other brilliant minds to maximize profits.

Steven Cohen: a mix of intuition and attention to the signals

To always be ready to ride a trend, you need to be able to “listen” to Trading Signals, rumors and market rumors.

Cohen has probably gone even further, in fact the fine that has suffered his fund for the abuse of privileged information is an example.

But the information is not enough, it also takes a pinch of intuition and the right Trading Indicators, always useful for confirming trend reversals.

At the base of Steven Cohen’s operations there is always a confirmation, there are never trades made suddenly, taken from the heat of the moment or from enthusiasm. You have to know how to wait, a patient trader is more profitable in the long term.

Online trading is full of false signals, so you need to know how to filter the good ones and wait until they are confirmed, better to lose a part of profit but not to enter on false inversions.

Steven Cohen is a staunch trend follower.

steve cohen

Conclusions

This guide analyzed Steven Cohen’s strategies and investments, trying to summarize his thinking. Obviously it is not easy to replicate his intuition but you can follow his indications, which will certainly bring improvements in your “trading style”.

To understand the most profitable strategies you need to train, do many tests in Demo, without taking risks, these are identical accounts to real ones but the money used is virtual.

Here are the links to access the Demo accounts of the best trading platforms that we have reviewed:

Who is Steven Cohen?

Steven Cohen is one of the best hedge fund managers in the world.

How does Steven Cohen make money?

Steven Cohen is a convinced trend follower who follows market trends carefully.

What strategy does Steven Cohen use?

For Steven Cohen, it is essential to have the right information to invest and always wait for confirmation before a turnaround.

Which Brokers to use to follow Steven Cohen’s advice?

To follow Steven Cohen’s advice, it is better to choose CFD Brokers without commissions, such as eToro which also allows you to make automatic investments.

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