Just starting out in forex trading and needing some motivation after making a big loss? Here is what the richest forex traders have to say about their trading journey and the advice they want to give you as beginners:
First, let’s take a look at George Soros, who is widely considered to be one of the most famous personalities in the history of foreign exchange trading. Many people consider Soros to be one of the most successful investors in the history of the world. Because of his remarkable awareness of economic trends, he has built a strong reputation for himself.
He is able to spot inefficiencies in the market and capitalize on them by engaging in massive deals that are very leveraged. When he made a profit of more than one billion dollars through short-selling the British pound in 1992, he established his status as a legendary figure. This earned him the title of “the man who broke the Bank of England”.
The rate of inflation in the UK was high at the time, and interest rates were greater than 13 percent. Because of this, Soros came to the conclusion that the ERM was responsible for maintaining an artificially high value of the British pound. The day when the United Kingdom officially withdrew from the European Exchange Rate Mechanism and allowed its currency to float freely again is now known as “Black Wednesday.
This event marked the beginning of a downward trend in the value of the pound. At this point in time, Soros had already accumulated a massive short position against the pound that was worth more than $10 billion. Soros was quoted as saying at one point, “I am only rich because I know when I am wrong.” Becoming able to recognize when you are in the wrong is a crucial component of being among the most successful forex traders.
One of the most important abilities required of a successful Forex trader is the capacity to recognize when they have made a mistake and act expeditiously to correct it. It is useful for successful traders to limit their long-term losses with this technique. George Soros is unquestionably one of the wealthiest Forex traders in the world, according to recent estimates of his net worth, which come in at $8.6 billion.
A connection exists between this profitable Forex trader and the trader who came in first place on our ranking of the finest Forex traders. Over the course of more than 10 years, Stanley Druckenmiller served as George Soros’ colleague at the Quantum Fund.
Druckenmiller looks up to Soros as his mentor. Since that time, Druckenmiller has established a great name for himself by ensuring the smooth management of billions of assets on behalf of the investment firm that he established, Duquesne Capital. He has, without a shadow of a doubt, built a name for himself as one of the most successful Forex traders in the whole globe.
In addition to contributing to the well-known triumph of Soros on Black Wednesday, Druckenmiller created a record of spectacular profits with Duquesne in the years preceding up to his retirement. As a result, it is believed that he has a net worth of more than $3 billion at this point in his life.
According to Druckenmiller, the concept of maintaining one’s money is the cornerstone of his very profitable trading approach, which he uses to generate long-term gains. When his trades are profitable, he pursues profits with vigor and rapidly cuts losses when they are not profitable. When his trades are not profitable, he cuts losses as soon as possible.
The key to success, according to Druckenmiller’s approach, is to make the most of your chances while you are in the right and to limit the harm you do to yourself when you are in the wrong. When questioned for the well-known book “The New Market Wizards,” Druckenmiller was quoted as saying, “There are a lot of shoes on the shelf; wear only the ones that fit.”
Bill Lipschutz is considered by many in the forex trading world to be a living legend. His illustrious career in the financial markets began in the 1970s, while he was still a student at the institution where he now has a prominent position.
After the passing of his grandmother, Lipschutz came into an inheritance of twelve thousand dollars and continued his education. Lipschutz started trading with this quantity of money and was able to double it to a total of $250,000. On the other hand, all of Lipschutz’s $250,000 went to waste because of a single poor choice.
That would have been the final straw for a lot of people, and they would have given up trading for good. But not for Lipschutz, who is widely regarded as one of the most successful Forex traders in the world. He continued to trade after graduating, at which point he joined Salomon Brothers as part of their training program.
Soon after that, he was asked to join their forex Department, and by 1985, he was generating an annual revenue of around $300 million for the company on average. Lipschutz thinks that market perceptions have just as much of an impact on price behavior as fundamentals do, similar to the beliefs held by many other successful Forex traders. He defines the foreign exchange market as being extremely psychological.
In addition, Lipschutz shares the opinion of Stanley Druckenmiller that in order to be a successful trader in the foreign exchange market, it is necessary to capitalize on the times when you are correct. He once said of trading “You have to figure out how to make money from being right only 20 to 30 percent of the time.”
Does this sound like an odd statement? It is important to keep in mind that even if you are successful in more than half of your deals, your winning trades should still have a larger total value than your losing ones. The majority of traders are looking for a strategy that guarantees them a profit in every trade and allows them to win eight or nine out of ten transactions, all while minimizing their exposure to loss and maximizing their returns in a short period of time.
However, successful trading requires patience. There is always a risk, and it is imperative that this risk be outlined and managed. The moment you put a limit on your exposure, you open the door to the potential of losing deals. In spite of this, the fact that your losses will be limited and manageable increases the likelihood that you will turn a profit from this strategy.
Lipschutz’s story of dedication and ability to come back from such a crushing defeat early in his career in order to develop into a successful trader earns him a place on our list of the richest forex traders in the world.
If Andrew Krieger wasn’t on the list of the finest forex traders in the world, the list simply couldn’t be considered complete. After receiving his degree from the Wharton School of Business, Krieger started working at Bankers Trust in the year 1986. Many people of the time thought him to be one of the most clever and well-known dealers who had ever lived during that age.
Because he was doing such a good job of impressing the management of his company, they increased his trading limit to 700 million dollars. This was a whopping fourteen times more than the typical maximum of $50 million!
After the stock market disaster known as “Black Monday,” which occurred in October 1987 and sent most markets down by at least 20 percent, Krieger determined that the New Zealand dollar was trading at a price that was too high. After that, he opened a short position on the currency that was worth hundreds of millions of dollars and leveraged it severely.
In point of fact, his short position was so huge at the time that it was speculated that it really exceeded the whole amount of money that was available in New Zealand during the period in question. Following the event, the New Zealand dollar saw a decline of 5%, which resulted in a gain of $300,000,000 for Krieger’s employers.
Paul Tudor Jones
Paul Tudor Jones, who is one of the most successful and richest traders in the world and is reported to have a net worth of more than $7 billion, is without a doubt one of the greatest forex traders who have ever existed. Following his graduation from the University of Virginia in 1976, he started working as a trader on the New York Cotton Exchange.
His specialty was cotton futures. After spending the night out with his colleagues at a party, he returned to his work exhausted and promptly slept off, which ultimately cost him his job. After that, he decided to pursue a career as a commodities dealer and in 1980 he established his own company called Tudor Investment Corporation.
This company engages in trading and investing across a wide variety of assets, some of which include shares, currencies, and commodities. Jones’s ability to accurately forecast and profit from the market fall that occurred on Black Monday in 1987 was one of his first and most significant achievements. As a result, his wealth was multiplied by three, and he reportedly made an additional $100 million as a result of this.
Paul Tudor Jones’ advice for beginner Forex traders: “The most important rule is to play great defense, not great offense. Every day, I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum drawdown. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out.”
He also reveals, “If I have positions going against me, I get right out; if they are going for me, I keep them. Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: get out, because you can always get back in.”
One of the most typical trading concerns is an aversion to loss which can lead to the rapid depletion of an account. On the other hand, it is possible for there to be a problem if successful transactions are not allowed sufficient room to run.
If you have a chance of winning that is less than fifty percent of the time, then your average winners need to be larger than your average losers. Even if you have a higher percentage of wins, you should still work to ensure that your average loss is less than your average victory.
Another one of the most successful foreign exchange traders in the world is Michael Marcus. According to history, he became renowned after transforming $30,000 into $80 million in just 20 years. He was also a founder member of the Commodities Corporation Company, which he helped to establish.
After receiving instruction from the well-known trader Ed Seykota, he went on to guide the career of another successful investor named Bruce Kovner. Marcus emphasizes that patience is one of the most crucial skills that one must possess in order to be a good trader.
Additionally, he stresses the need of practicing sound financial management, advising his audience at one point to “always risk less than 5 percent of your money on any one notion.” You have a chance of being incorrect more than twenty times, but it will take you a long time to lose your money if you play it this way.
Marcus took advantage of the high dollar under the presidency of Ronald Reagan to establish significant holdings in the market. He once claimed that he usually maintained stakes worth approximately $300 million in Deutsch marks.
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