Best professional FX traders
Here is the list of some of the best Forex traders in the world:
- George Soros
- Stanley Druckenmiller
- Bill Lipschutz
- Andrew Kreiger
- Paul Tudor Jones
- Michael Marcus
- Richard Dennis
- Bruce Kovner
- Axel Merk
Now let us go through the stories and trading styles of each of them in more detail.
George Soros worked at several banks in the United Kingdom and then the United States, before starting his first hedge fund in 1959, called the ‘Double Eagle’. Later the fund was renamed as the ‘Quantum Fund’.
The biggest success during the trading career of George Soros came in 1992, during so-called the ‘Black Wednesday’. The fact of the matter was that the United Kingdom joined the European Exchange Rate Mechanism (ERM) during Autumn 1990. According to the rules, the British pound was pegged to the German Mark at 2.95 level.
However, it is worth noting that this arrangement did allow for a certain amount of fluctuation. According to the rules, the GBP/DEM exchange rate could diverge from 2.95 level by 6% in either direction. This means that the bottom of the range was at 2.773 level. Consequently, the British government had taken on the obligation to follow such an economic and monetary policy to maintain the GBP/DEM exchange rate within the range.
After the reunification of Germany, the German Bundesbank faced the challenge of the higher inflation rates. Consequently, the German policymakers started raising interest rates to confront the general price level increases. Eventually, this policy did have its intended effect. However, it also led to some unintended consequences. The German mark started appreciating against some of its peers including the pound.
At that time the Bank of England was not independent and interest rate decisions were made by the British government. At that time the UK interest rates were already quite high, leading to a downturn in the housing market, as well as the bankruptcy of several businesses. Considering these factors, it is not surprising that the British government was unwilling to increase the rates further to match the policies of the German Bundesbank.
This is exactly where the Quantum fund of George Soros comes into play. Soros identified a great trading opportunity, realizing that the pound was overvalued, and considering the circumstances, the GBP/DEM peg was highly unsustainable.
Consequently, on 16 September 1992, also known as the ‘Black Wednesday,’ the Quantum fund took a $10 billion short position with the UK pound currency pairs. The results were predictable: the pound began to depreciate significantly against the German mark and the US dollar, with the Bank of England spending billions of pounds to maintain the exchange rate. In addition to that, the UK government has authorized several number of rate hikes. As a result, before the end of the trading day, the UK key interest rate has reached 15%.
The struggle continued for the entire day, but by evening, after holding several meetings of cabinet members and losing billions of pounds, the UK government had decided to give up and leave the European Exchange Rate Mechanism. As George Soros himself mentioned, his fund made in excess of $1 billion in profits in a single day. Since then Soros is known as the man who broke the Bank of England. Therefore it is not surprising that some people regard Soros as the best Forex trader in the world.
Under his leadership, the Quantum fund continued its successful trading business for the next two decades. By Summer 2011, the assets of the fund had reached $12 billion. However, at that time George Soros decided to turn the Quantum fund into the family investment group. Consequently, the fund returned all outside money to investors before the end of the year.
The current net worth of George Soros as of 2020 is above $8 billion. However, throughout his career he donated $32 billion to his ‘Open Society Foundations’, promoting liberal political causes across the globe.
Stanley Druckenmiller worked for the Quantum fund for more than 10 years and considers George Soros to be one of his mentors. After leaving his previous job, he established his own hedge fund called ‘Duquesne Capital’.
The fund turned out to be quite successful. He did achieve double digit returns for most of the years during his trading career and consequently attracted many investors. He eventually retired, with his net worth exceeding $2 billion.
His trading theory recognizes that even some of the best forex traders in the world can from time to time make the wrong decisions. Therefore, in order to succeed, traders need to minimize their losses when they are wrong and maximize their gains with the winning trades.
Therefore, Druckenmiller attaches a great deal of importance to those aspects of trading such as capital preservation, risk management, and setting a proper risk/reward ratio in favor of the trader.
Bill Lipschutz first started trading when he inherited $12,000 from his grandmother, but over the course of several years, he managed to turn it into more than a billion dollars. During the 1980s he worked for Solomon Brothers at the Forex department. He turned out to be quite a successful trader in Forex, even earning $300 million in the process.
He often stresses the importance of risk management. According to his philosophy, the trader will always be able to get the time of the opening and closing trades correctly. However, the market participants should always make sure that they choose such a trading position as to avoid margin calls and being forced out of the trade. He also believes that any trading idea should be well analyzed before a trader decides to open the position.
Andrew Kreiger started his trading career back in 1986 when he joined the Bankers Trust. At that time, the standard trading limit for employees in that company was set at $50 million. However, taking into account his talent and successes, the firm’s management has decided to increase the trading limit for Kreiger to $700 million.
They were not disappointed. In fact, in 1987 Andrew Kreiger identified the New Zealand dollar to be very overvalued. As a result, he placed short positions for NZD, using 1:400 leverage. It goes without saying that this was a quite risky bet. Yet, it paid off quite well. As the New Zealand dollar fell by 5% against the US dollar, Kreiger has earned $300 million for the firm. Later in his life, he also worked for the Quantum Fund with George Soros.
Paul Tudor Jones
Paul Tudor Jones made his name back in 1987 during the stock market crash. At that time he held large-sized short positions on the market and after the crash, he made a massive 62% return on those investments.
He is also a top Forex trader. In fact, back in 2013, he opened large positions against the Japanese yen. As the JPY lost ground against the other major currencies, Jones has made a 20% return on investment and expanded his net worth considerably.
According to him, one of the main secrets of being a successful trader is to have an undying thirst for knowledge and information.
Next on our list of successful Forex traders is Michael Marcus. He did manage to save $30,000 for trading and then in a decade turned this initial investment into $100 million. One of his successful moves was to purchase the German marks worth of $300 billion during the Reagan presidency in 1980 when DEM was highly undervalued.
This turned out to be a smart investment, as from 1985 to 1987 the German currency made some significant gains against the US dollar, with Marcus earning millions of dollars in payouts. He is also known as a successful commodities trader, having founded Commodities Corporation Company.
Richard Dennis began trading with a humble beginning, borrowing just $2,000 from his relatives to get started. It is likely that at that time many people would not have expected him to become a millionaire. However, well within 10 years, he did manage to turn this initial investment into $200 million, earning his rightful place among the greatest Forex traders in the world.
According to his trading philosophy, two mandatory things in Forex trading are discipline and consistency.
The case of Bruce Konver is very interesting. Even nowadays many people believe that for a person to become a successful FX trader, one has to inherit a lot of money, or at least have a specific financial academic education. However, Kovner did not belong to any of those categories.
He was just a taxi driver and supported himself with this job. Yet later he saved up some money to start trading in the Foreign exchange market. Surprisingly after years of trading, he became one of the richest day traders in the world, with his net worth exceeding $1 billion. So his example shows that with the knowledge and determination, regardless of one’s background, everyone has a chance to become one of the most successful Forex traders in the world.
Some people we covered in this guide have already retired from Forex trading, consequently, nowadays traders might not have a chance to often get their opinions about the latest currency movements.
This is not the case with Axel Merk, who still actively runs the ‘Merk Investments’ and also very often comments on the latest developments in the market. Merk is originally from Switzerland. He first started trading back in college, where he managed for his friends.
In 1994 he pulled together all of those assets to create the ‘Merk Investments’. In 2001 he moved his business to the United States in the State of California. From there he created the ‘hard currency fund’ which aims to benefit from the long term Forex trends.
Throughout his career, he made many accurate predictions about future market movements. For example, he predicted the substantial rise of the Euro exchange rate from late 2012 to early 2014. He also predicted the massive expansion of the gold price during 2019-2020.
He is one of the strongest advocates of the theory that the real interest rates are one of the most important factors which determine the Forex exchange rate movements. Merk also believes that budget deficits can have a sizable long term impact on the Forex market.