The Top 6 Best Forex Traders of All Time
Whether you are brand new to Forex trading, or an experienced trader on the foreign currency exchange markets, you are all likely to share one key aspiration: to become a successful trader in Forex markets. This article will dive into a few stories of the best Forex traders who were able to become extremely successful, and it will also provide you with tips on how to become successful yourself!
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The Best Traders to Copy: Traders for beginners
One way to improve is to learn by example, and a good beginning point is to discover who is the best Forex trader in the world. So, let's ask ourselves, who is the best Forex trader? And how did this person become so successful?
In this piece, you'll learn what the most successful Forex traders all have in common, and how each of those characteristics helped them earn incredible profits.
Are Most Traders Successful? You May Be Surprised
Before we start our list, we're going to look at some stats on exactly how many successful traders there are and how many new traders become successful, fail or quit.
You may have heard different statistics from different sources stating that the number of the richest Forex traders is extremely small, relative to the number of unsuccessful ones. There are a few reasons to be sceptical of these claims.
Firstly, hard and reliable data on this exact topic is difficult to come across because of the decentralized nature of the Forex market. However, there are plenty of educational materials and effective Forex trading strategies that are available online that can help you improve your trading skills.
Secondly, we would expect the distribution of successful traders and unsuccessful traders to reflect something like that of a bell curve. By this, we mean that there should be:
- very few highly unsuccessful Forex traders
- a larger number of relatively unsuccessful traders
- an immense number of small winners; and
- a very small amount of large winners
The data that is mostly available from Forex and CFD firms (I should note here that it is a very small slice of the whole global FX market) indicates that it's not common for people to become incredibly successful traders. Most people stop as soon as they begin losing an amount of money above a certain threshold.
The big winners continue trading. The number of unsuccessful traders is slightly larger than the number of small winners. This is primarily due to the effect that the market spread has on a trade at the start of it.
Therefore, the percentage of unsuccessful Forex traders does not immensely outweigh the number of successful ones.
There is very little doubt that the most successful traders are a part of an elite and small group. However, by looking at a specific group of famous traders we can see that they have some things in common.
- Discipline—the ability to see when a trade is dangerous and therefore, reduce losses
- Risk control—having a solid understanding of the risk vs. reward of any potential trade
- Courage—the ability to remain different from the rest of the group, regardless of what they are doing
- Astuteness—the ability to judge how perceptions are shaping the market trends at any time
It does seem to be challenging to develop all of the characteristics listed above. However, in the long term, these are some of the most important traits for trading.
While it's guaranteed that you will make mistakes, one important thing is that you can learn from them and the way you develop a solution to correct them will help your trading.
Take advantage of the experience that has been shared by expert Trader Markus Gabel, from this free webinar below that will help you understand how trading psychology affects a traders' run.
Now, without further ado, let's dive in and find out which professional traders display these characteristics and others, on our list of successful Forex traders from all around the world!
The Best Forex Traders
1. George Soros
Let's start our review of the best Forex traders to follow by having a look at one of the most legendary symbols of excellent fortune in Forex trading, George Soros. If we were to ask, "Who is the greatest Forex trader? " Soros' name would almost always appear high up on any list.
Mr Soros is well known as one of the greatest investors in all of history. He sealed his reputation as an incredible money handler by reportedly profiting more than £1 billion from a short position in pound sterling. He successfully pulled this off before Black Wednesday, 16 September 1992.
At the time, Britain was participating in the Exchange Rate Mechanism (ERM). This system required the government to interfere if the value of the pound fell below a specific level against the Deutsche Mark.
Soros was successful in predicting that a certain set of circumstances—which included then higher-than-average interest rates in Great Britain, and less-than-desirable rate at which Britain had become a part of the ERM—had resulted in the Bank of England (BoE) being in a vulnerable situation.
Britain was committed to sustaining the value of the pound against the Deutsche Mark. They intervened in the form of either buying sterling or increasing interest rates when the value of the pound fell, or sometimes both. Because of the recession, higher interest rates damaged the rest of the economy. This negatively impacted investment at a time when encouragement was extremely valuable.
Economists at the BoE saw that the appropriate level of interest rates was a level much lower than those needed to support the pound as part of the ERM.
However, the value of sterling was sustained due to the UK's commitment to purchasing sterling.
In the weeks ahead of Black Wednesday, Soros used his Quantum Fund to establish a large short position on sterling. Then, on the day before Black Wednesday, the President of the German Bundesbank spoke, suggesting specific currencies could come under pressure.
And this led Soros to raise his position considerably. On Wednesday morning, when the BoE started to buy billions of pounds, they discovered that the value of the currency had barely shifted. This occurred because there was a wave of selling in the market as other participants decided to copy Soros.
A final effort to increase UK rates, which had briefly reached 15% was not successful. When the UK announced that it would leave the ERM and that it would resume the free-floating pound, the currency dropped 15% against the Deutsche Mark. It also fell 25% against the US dollar.
Because of this, the Quantum Fund earned billions of dollars, which led to Soros becoming known as the person who broke the Bank of England. This event can easily be included in the list of the greatest Forex trades.
Want to know the best part?
Although Soros' short position in the pound was huge, his downside was always relatively restricted. Leading up to his trade, the market had shown no appetite for sterling strength. This was demonstrated by the repeated need for the British government to intervene in propping up the pound.
Even if his trade had gone wrong, and Britain had managed to stay in the ERM, the state of inertia would have more likely prevailed and have led to a large appreciation in the pound.
Here it is possible to see Soros' incredible appreciation for the risk/reward principle - an area of his strategy that was crucial in establishing his reputation as one of the best Forex traders to follow on Earth. Rather than subscribing to the traditional economic theory that prices will eventually move to a theoretical equilibrium, Soros deemed the theory of reflexivity to be more helpful in judging the financial markets.
This approach infers that perception and events feed off each other. This means that the way in which market participants perceive the markets influences the market price movements and this, in turn, also influences perceptions.
At one point, Soros claimed to the Wall Street Journal that he was only rich because he was able to see when he was wrong.
This displays both his eagerness to end trades that have no chances of profiting and his great degree of discipline, which is common among the best Forex traders on Earth.
As such, George Soros has made his way to the top of the list as one of the best Forex traders to follow and is definitely among the highest-earning short term traders on Earth.
And, by the way, if you are interested in getting a deeper glimpse into the life of George Soros, there is a documentary on him and his life. So get out there and find it. Some consider it the best Forex traders documentary.
2. Stanley Druckenmiller
George Soros casts a long shadow, so it shouldn't be too much of a shock that this successful Forex trader is connected to the following trader on this list. Stanley Druckenmiller considers George Soros his mentor. Mr. Druckenmiller was a coworker of George Soros at the Quantum Fund for over ten years.
Since then, Druckenmiller has developed an esteemed reputation for himself, successfully handling billions of dollars for Duquesne Capital, a fund which he started. Without a doubt, many of the best Forex traders see him as one of the best day traders on Earth.
In addition to participating in Soros' well-known trade on Black Wednesday, Mr Druckenmiller established an impressive history of year-after-year profits in the double-digits with Duquesne, leading up to his retirement. Druckenmiller has a net worth estimated at more than $2 billion.
Druckenmiller has said that his trading strategy for developing long-term profits is founded on the idea of preserving capital. He aggressively pursues profits during times when his trades are working well. With this strategy, it is less important to be right or wrong. In this case, timing has a focus.
Instead, it focuses on the value of maximizing opportunities in which you are right and minimizing your damage in situations where you are wrong. As Druckenmiller stated when interviewed for the celebrated book 'The New Market Wizards', "there are a lot of shoes on the shelf; wear only the ones that fit".
3. Bill Lipschutz
Oddly enough, Bill Lipschutz earned hundreds of millions of dollars in profits at the FX department of Salomon Brothers in the 1980s - despite having no previous experience in currency markets. Often called the Sultan of Currencies, Mr Lipschutz describes FX as a highly psychological market. And, like our other successful Forex traders, the Sultan believes market perceptions influence price action as much as pure fundamentals do.
Lipschutz also agrees with Stanley Druckenmiller's view that when you are considering how to be a successful trader in Forex, your success is not dependent on being right, and, in fact, more often than not you are wrong. Instead, he stresses that you need to work out how to make money when being right only 20 to 30 per cent of the time.
Here are some of Lipschutz other key tenets.
- Any trading idea needs to be well thought out before you place the trade
- Build a position as the market goes your way and exit the same way
- Start easing up once there are signs that the fundamentals and the price action are beginning to change
- There is a need to be aware of the market's focus
- FX is a 24-hour market and doesn't stop moving when you go to bed
Lipschutz also stresses the need to manage risk. He claims your trading size should be chosen to avoid being forced out of your position, if your timing is inexact.
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4. Andrew Kreiger
Any list of the best Forex traders on Earth would be incomplete without mentioning Andrew Kreiger. Kreiger graduated from the Wharton School of Business, and in 1986 joined the Bankers Trust, following a stint at Salomon Brothers.
Many considered him to be one of the most aggressive and well-known traders of that era, impressing the top management so much that they gave him a trading limit of $700 million, against the usual $50 million limit.
In the aftermath of the October 1987 crash, where most markets went spiralling downwards by at least 20%, Kreiger identified the New Zealand dollar to be highly overvalued. He went short on the currency at a leverage of 400:1; exceeding the actual circulating liquidity of the currency.
Within a few hours the currency moved 5% against the US dollar, Kreiger ended up making $300 million for his company. Interestingly, he went on to work with George Soros in the future.
5. Paul Tudor Jones
Easily one of the best Forex traders ever is Paul Tudor Jones, who also shorted the October 1987 market crash. He is one of the richest day traders alive today, with a net worth of $7 billion as of 2021.
Born in 1954, Jones earned a degree in Economics from the University of Virginia, in 1976. He actually started his career as a clerk on the trading floor.
Turning down an opportunity to go to Harvard Business School, Tudor Jones went on to work as a commodities trader in the NYSE.
He then founded his own firm, Tudor Investment Corporation.
In October 1987, during a time when markets were spiralling downwards, he successfully earned 62% profits, only by entering short positions. He ended up generating $100 million in the same year for his firm.
Tudor Jones ended up taking his firm to new heights. From 1992 to 1995, he was the Chairman of the NYSE.
6. Michael Marcus
Michael Marcus is one of the best Forex traders in the world.
He is one of the original members who founded the Commodities Corporation Company. He was trained by the notorious Ed Seykota and went on to mentor another great trader by the name of Bruce Kovner.
During the Ronald Reagan era, Marcus held positions of almost US$300 million in German marks. It can be said that along with banks, he was the largest currency trader in German marks at that time.
So far, I have mentioned in this article several of the most famous traders. However, there are many successful, lesser-known, traders all around the world, and discovering what their traits and strategies are can only widen your perspective on trading.
Who is the best Forex trader in SA, for example? Hint: it's George Soros. But what about in Switzerland? Or Japan? If you are curious, why not find out?
Studying the best Forex traders in the world is an effective way of improving your trading strategy.
We've discussed some of the best forex traders, but without a sound strategy, none of this information will be useful to you.
So, which strategy do you use? Or are you still deciding? This is one important thing that is essential for any trader who is looking for success. This is what we'll discuss next.
How Successful is a Successful Trader?
So far, we've looked at the best Forex traders, including some of the most successful traders in the world and given insight into their personality.
In case you are interested in more than who these people are, and you would like to know a bit about how to trade like them, I will give you some basic trading strategies.
However, remember that while there are many professional FX traders in the world with strategies that seem to be flawless, these were not developed overnight and each trader chose a strategy that best suited their goals and preferred trading style.
If you aim to make it on the list of traders that regularly earn a profit each month trading FX, it is certainly an achievable goal. However, you need to develop your own Forex trading plan first.
Here are some trading strategies to consider.
We cannot provide the strategies that these famous traders have used, but we can give you some fundamental strategies that you can consider.
Depicted: Admiral Markets MetaTrader 5 - USDCHF H4 Chart. Date Range: 12 May 2021 - 15 June 2021. Date Captured: 5 July 2021. Past performance is not a reliable indicator of future results.
Our first strategy aims to find out when a trend might be developing. It searches for price breakouts. Markets often range between support and resistance bands. This is called consolidation. A breakout is when the market shifts outside of the boundaries of its consolidation, to a new level of high or low.
When a fresh trend forms, a breakout must take place first. As such, breakouts are perceived as a possible signal that a new trend is developing. However, every trader must be careful, because not every breakout means that a new trend has started.
In Forex, no matter whether you are using complex or simple strategies, it is essential to always employ risk management. In doing so, you can minimize your losses while the trend is breaking down.
If the breakout sets a new high, it means that an upward trend could be forming. As you may have guessed, if the breakout results in a new low, then what follows could likely be a downward trend.
Let's take a look at a quite reasonable long-term breakout strategy:
We can consider it a buy signal when the price has broken out beyond the 20-day high. On the other hand, it is a signal to sell when the price breaks below the 20-day low. While this is simple, it comes with one potential drawback. Specifically, as I mentioned above, while a breakout to new highs can indicate that an upward trend is forming, it is not always the case.
The same is also true for downtrends. Downtrends do not always follow new lows. These are called false signals. This is one example of how, even when a trader follows a strategy, it is essential to employ risk management all the while.
Using a stop-loss is one way to help prevent losses after you enter into a trade. For long term trading, some traders follow the rule to simply exit a trade after a certain number of days have elapsed. By using this strategy, you can avoid misinterpreting downtrend signals.
However, this is a long term strategy, not a short term strategy. And, as always, if you find that it does not yield positive results, then you should adjust it. For example, you can shorten your strategy and use hours instead of days.
2. Moving Average Crossover
This strategy uses a simple moving average (SMA), which is an indicator that uses historical price data and evolves more slowly than the rate at which the current market price changes. The SMA can be averaged over various periods of time. If it is averaged over a longer period of time, then the SMA moves more slowly.
It is common for traders to use both a long and short SMA in conjunction with each other. For this example, we will use a 25-session moving average and a 200-session moving average.
Depicted: Admiral Markets MetaTrader 5 - GBPUSD Daily Chart. Date Range: 12 May 2020 - 5 July 2021. Date Captured: 5 July 2021. Past performance is not a reliable indicator of future results.
In the chart above, you can see the 25-session moving average, which is the dotted red line. This line follows the real price closely. The 200-session moving average is the smoother, solid blue line. You can see that it smooths out the price changes over time, depicting a different, less volatile looking, trend.
Now, when the two SMAs cross each other, it often indicates a trend change. Specifically, when the short SMA crosses above the long SMA, this means that the current prices are higher than the old ones. This can indicate a bullish trend, which would be a buy signal.
When the opposite occurs, and the short SMA crosses below the long SMA, it means that current prices are lower than old ones, which can signal a downtrend, which we can interpret as a sell signal.
Aside from indicating buy and sell signals, SMAs can also be used to confirm overall trends.
As such, we can combine two different strategies with the SMAs to help identify dangerous situations in which we could lose.
For example, if the breakout indicates an uptrend, we can check to see if the short SMA is above the long SMA. If it is not, then it is often better to wait.
3. Carry Trade
This is an essential strategy. This one is in wide use by professionals, so we cannot consider it a complete beginner strategy. However, it is quite simple to understand and implement.
The aim of a carry trade is to profit off the difference in the yield between two currencies.
In order to understand, we are first going to demonstrate a basic principle with an example of a person who converts money.
Suppose that a trader borrows some amount of the Japanese Yen. If the benchmark Japanese interest rate is very low, then the cost of holding this debt is also very low.
Next, the trader exchanges the Japanese Yen into US dollars and then buys a government bond, which yields a higher per cent than the benchmark Japanese interest rate. The interest this trader will receive on the bond should cover the cost of financing the Yen debt.
However, there is a risk with carry trades.
Carry Trade Risks
If the Yen appreciates against the US dollar, the trader will lose money, in the end.
The same principles are relevant when someone is trading Forex. However, Forex traders have the luxury of it all being consolidated into one trade. If a trader buys a currency pair, in which the ''base currency" has a sufficiently high-interest rate, relative to the ''quote currency'', the trader's account will profit.
The amount the trader yields correlates to the amount of currency the trade commands. This is why some traders use leverage, which can greatly multiply the size of the yields. However, leverage can equally greatly multiply the size of losses. Because of this, it is extremely dangerous.
This is why it is highly important to assess the currencies you are considering trading and try to select the right ones. In these trades, inertia is essential. You want to find a low volatility FX pair. Lower volatility can offer safer trades. Trading highly volatile currencies can result in large and unexpected losses.
It is worth noting now that the Japanese Yen has been a common funding currency for a long time, because its rates have been quite low for a long time. The Japanese Yen is also seen as a stable currency.
This strategy can work well when traders are seeking out higher-yielding assets. As traders implement this strategy, this action supports the strategy. This is because as more people enter trades using this strategy, the selling pressure on the funding currency increases.
However, there can be a problem with this strategy in times of crisis. When there are low interest rates around the globe, the differential between interest rates in different currencies is narrow. When traders lose their appetite for risk during a crisis, many of them can lose as people put their funds into safe-haven assets like the Japanese Yen. If the Fed signals that it intends on tightening monetary policy, then under these conditions, the carry trade can become favourable.
Can You Get Rich Trading Forex?
Even the most successful trader had to begin somewhere and if you can regularly earn profits - you can consider yourself a successful Forex trader, but getting rich depends on your skillset and, of course, a bit of luck.
While you learn, you can get out there and capitalize on all of the resources available in today's world and, for example, find a video tutorial on YouTube, or find the best Forex traders to follow on Telegram. However, whether you learn from the best Forex trader course, or you learn from your own research, there are key fundamental traits that most traders share.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of, or recommendation for, any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.