If you trade forex (currency pairs) you will know how challenging it can be at times.
However, some people still make fortunes.
Their stories are incredible, as well as inspiring. We take a look at some of the very best and most accomplished forex traders in history. These are the big guys, the pioneers…
…and we’ll start with the biggest.
#1 George Soros
Known as ‘the man who broke the Bank of England’, and possibly the top forex trader of all time, Soros has become a legend, and over the years he has been an inspiration for many traders who want to be successful. He first became famous for selling short on the pound back in 1992. He made a short sale worth £10 billion, and made a billion dollars for himself out of it. While this made him wealthy, it also made him the most successful trader ever, having the biggest amount made from a trade in one single day.
His skills have not been limited to the foreign exchange. He also started a hedge fund management company in 1969. This firm has been incredibly successful, with revenue worth $40 billion being created since its inception.
Soros has a strategy that has often been labeled ‘difficult’ to emulate. Fundamentally, Soros feels that markets are often actually driven by investors, especially amateur investors. With a combination of strong research and what he would himself call a ‘seat of the pants’ approach, he simply makes big bets on investments, and whether they will increase in value or decrease.
He does this for currencies, and that’s why other investors have tended to watch him closely. When he focuses on a currency, they follow him, and this in itself often results in a significant fluctuation in the forex markets. His Bank of England episode is, however, the reason why he is seen as the best forex trader in the world. Arguably the highest earning forex trader of all time, he is still seen as the most successful trader in the world ever.
#2 Bill Lipschutz
Lipschutz had a rocky start to his career, relatively speaking. His first big trade happened when he invested a small amount of money, just $12,000, and eventually had a portfolio worth $250k after all his risk capital had been invested. He inherited that initial $12,000 sum from the death of his grandmother.
Then, he lost all of that money due to market fluctuations. He bounced back, landing a position at Salomon Brothers. Shortly after he joined the company, they opened up a new department. At around that time (early 1980s) foreign exchange market trading was really becoming a popular area in both the media and investing circles. Salomon Brothers created a brand new department to trade forex. Lipschutz joined this team.
Lipschutz is actually quite similar to Soros in his philosophy. He believes that going with the crowd in forex is wrong, and that to make the biggest returns, you have to bet against what the crowd is doing. This has stood him in good stead. At his peak with Salomon Brothers, he was bringing in $300 million per year.
#3 Paul Tudor Jones
A trader who is nearly as famous as George Soros, Paul Tudor Jones is well-known for bringing in huge returns. He has his own firm, Tudor BVI Global, which has reaped the benefit of his strong ability to pick positions that are aggressive against currencies.
A high point came in 2013, when he bet against the Japanese Yen. He is known as a good example of a ‘swing trader’. He makes the biggest returns when swings happen, rather than the periods in between.
Another aspect of his work that is intriguing is the ‘mental stop’ approach. This is where he creates a stop position and sticks to it. This is regardless of what is happening in forex. He will close the position no matter what is happening.
He monitors in real time when he takes positions, which is again a key difference. The real time work does mean working around the clock. While this is not necessarily his approach anymore, it most certainly was in his earlier trading success.
#4 Stanley Druckenmiller
While George Soros may be the most famous forex trader of all time, he’s also a big influence on other traders.
Stanley Druckenmiller has always made it clear that Soros was his mentor. He worked at the Quantum Fund for a number of years with Soros. He then set up his own hedge fund, Duquesne.
He’s retired now, but was making huge profits through Duquesne and has a personal wealth that has been valued in the billions. His trading strategy is interesting, to say the least. While Soros was always a big believer in taking positions that were defiantly against the grain, Druckenmiller followed an arguably less risky path and tends to actively avoid losing money.
His focus was on retaining capital as much as possible while trading currency pairs, and then becoming much more aggressive in trades when gains occurred. This allowed him to reduce risk significantly.
#5 Andrew Krieger
Krieger graduated from Pennsylvania’s Wharton Business School and then went straight into a job at Bankers Trust.
When Black Monday happened in 1987 the vast majority of traders panicked. Krieger didn’t, and sold the New Zealand dollar. This was a huge deal, and made him $300 million.
This was such a significant event that his sell orders eclipsed the amount of money the New Zealand government had in its coffers. Soon after his huge success with the Kiwi, he went to work for George Soros.
The key point here is that Krieger used fundamental analysis before he made his move. By studying the markets and movements closely, he was able to make the right judgement call. Granted, he struck at precisely the right moment, but the technical analysis swung the situation in his favour.
#6 Bruce Kovner
Compared to others on this list, Kovner is perhaps the most unlikely forex billionaire. Once he had finished studying at Harvard, Kovner became a taxi driver. While driving for a living, he began to learn about commodities trading and made his first trade.
In 1977 he completed his first trade in soybean contracts. Using a credit card, he bought $3000 worth of contracts and watched as their value soared to $40,000. Even this moment wasn’t ‘textbook’, because he only sold the contracts when their value dropped to $23,000. This episode reportedly taught him the value of solid risk management.
Bitten by the trading bug, he then joined Commodities Corporation before forming Caxton associates.
He has a net worth of over $5 billion today. His trading strategy is based on the strong fundamental understanding that you should always a have a stop limit that you stick to.
#7 Michael Marcus
Back in October 1971, Marcus met the most influential person in his life, Ed Seykota. Seykota had, at a young age, developed his own software for studying trades. Remember that this was back in 1971.
Seykota effectively mentored Marcus, and this helped Marcus become a wealthy man. His strategy has been discussed many times over the years. It’s probably no surprise to hear that Marcus believes that courage in keeping a position is essential. He also feels that having the courage to take a risk, while following a sound strategy, is how people make it to the top of the trading tree.
#8 Urs Schwarzenbach
Schwarzenbach started working at The Swiss Bank Corporation in 1968. Eventually, he joined the the forex division.
He went to London on company business in 1972. While in London, Schwarzenbach formed his own company. Among the top currency traders, he is known for being relatively unknown, compared to Soros, for example. His work is largely secret, and he is not one to talk about his strategy in the media. The general consensus is that he is a cautious, disciplined trader.
#9 Michael Steinhardt
Not a conventionally famous currency trader, and another quiet character, Steinhardt is famous for having consistently high yields. Not many traders can claim to have an annual compound growth rate of 24%, over 28 years.
Known for having a wide investment strategy, he has differentiated himself from other successful traders by placing money into various different positions and options. This versatility has perhaps helped him make that impressive yield figure for so long.
As regards his investment strategy, he has always maintained that information is key. At the same time he also believes that no one will ever have all the information required to make a cast-iron trade. The more you have, and the more intelligently you use information, the better your chances.
#10 Joe Lewis
Lewis has a strong link with George Soros. He was part of the famous trade that saw Soros become the man who ‘broke’ the Bank of England.
Before he worked with Soros on that big trade in 1992, he had already made a lot of money, but his level of risk was not large. Before he met Soros he was known as a sensible, methodical trader.
After the Soros episode (where, it’s rumoured, he made even more money than Soros himself), Lewis then scored another big deal against the Mexican Peso. In the mid 1990s Mexico had little money left in the reserves and the government itself was in crisis. Lewis traded on a short of the currency and made a huge amount of money.
He is intensely private, and only spoke to the media for the first time in the late 1990s. His strategy hinges on an aggressive style, almost to the point of bullying a currency when it is in a bad place.
#11 Richard Dennis
Dennis first became a runner on the floor of the Chicago Mercantile Exchange. He was 17 years old at the time.
His first major profit came with soybeans in 1974, where he made $500,000. By the time he was 26 years old, he was a millionaire. His fortune fell and rose many times over the years he was active, and he reportedly lost $10 million in the 1987 Black Monday crash.
Dennis has always praised the virtues of having a good trend-following system. In fact, he once trained a number of beginners to become successful forex traders using his system, and gave them a trading account with his money to trade with. After the whole project was over, the traders had brought in a profit of $175 million.