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
- James (Jim) Simons
Most beginner traders start the trading journey because they think that it's an easy way to make a lot of money. In fact, all the top Forex traders are hard workers. Every successful trader has a different trading style and personality, which tells us that there are many ways to make money in the market. In order to succeed, it's important to find the trading strategy that fits your personality and, at the same time, shares the core principles that are followed by the best Forex traders in the world.
Now let us go through the stories and trading styles of the top 10 Forex traders in the world and see what we can learn from them.
George Soros has worked at several banks in the United Kingdom and later in the United States, before starting his first hedge fund in 1959, called the ‘Double Eagle’. Later the fund was renamed to ‘Quantum Fund’.
The biggest success during the Soros trading career, 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. The mechanism was used for semi-pegging the British pound to the German Mark at 2.95 level.
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. To achieve this goal, the central Bank of England was directly participating in the market by purchasing and selling British Pound Sterling.
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 reduce money supply and decrease inflation. 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. It's worth mentioning that 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 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 various 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 trading job, he established his own hedge fund called ‘Duquesne Capital’.
The fund turned out to be quite successful. He did achieve double-digit percentage returns for most of the years during his trading career and consequently attracted many investors. Stanley 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 make the wrong decisions
from time to time. Therefore, in order to succeed, traders need to minimize their losses when they are wrong and maximize their gains with the winning trades.
Stanley 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. He managed to turn that money into 250,000 USD. However, he lost the entire amount in a single trade. That mistake has helped Bill to focus on risk management in his trading career. During the 1980s, he worked for Solomon Brothers at the Forex department. He turned out to be a great Forex trader. During his time in the company, he earned $300 million and gained fame.
In his interviews, Bill often stresses the importance of risk management. The mistake he made when he first started trading became his greatest teacher. The best forex traders do not waste mistakes. They use them for growth. Great risk management skills help traders attract investors and make more money by trading larger positions while taking small risks.
Andrew Kreiger started his trading career back in 1986 when he joined the Bankers Trust. According to the company's rules, the standard trading limit for traders in that company was set to $50 million. Through hard work and dedication, Andrew gained access to managing larger capital. After convinced that Andrew was a talented trader, the firm’s management 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 highly overvalued. He took the opportunity and placed short position for NZD, using 1:400 leverage. It goes without saying that this was a quite risky bet. Yet, it paid off quite well. The New Zealand dollar fell by 5% against the US dollar and Kreiger earned $300 million for the firm. Later in his life.
Paul Tudor Jones
In 1980, Paul founded his hedge fund named Tudor Investment Corporation and started trading actively. Paul Tudor Jones made his name back in 1987 during the stock market crash. At that time, he held large-sized short positions. Paul successfully predicted the crash that made him massive returns.
Paul is actively investing in various asset classes, including stocks and Forex pairs. 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 Paul Tudor Jones, 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. Michael Marcus is a legend among Forex traders. Michael used compounding and turned $30,000 initial investment into $80 million dollars in a matter of 20 years. One of his successful moves was to purchase the German marks 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 the process.
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. He managed to save 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 today. His example shows that with the knowledge and determination, regardless of one’s background, everyone has a chance to become one of the
best traders in the world.
Axel Merk is a president and CIO of the investment company that Axel created himself in 1994, called Merk Investments. Merk is originally from Switzerland. He first started trading back in college, where he was managing funds for his friends.
In 2001, he moved his business to the United States in the State of California where he created the ‘hard currency fund’ which aims to benefit from the long term Forex trends. Throughout his career, Axel 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.
Jim is the last trader in our top 10 Forex traders list. James is known as the Quant King. In 1982, he created a money management fund called Renaissance technologies. Jim is a mathematician by profession, but the source of his strength in the trading world comes from elsewhere. Jim is a great manager. He has created a team of amazing professionals that help him run the company. In 2009, he retired from his company, but remains as a chairman. Renaissance technologies hire people from various backgrounds such as traders, coders, mathematicians, physicists, etc. The company is highly dependent on using trading algorithms and automation.