What can we learn from 3 top global traders?

Author: Forex Live | Category: Education

Lessons we can learn from the market wizards

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In Forex we can define success as turning a profit and staying in the black. Experienced traders will always tell you that to be profitable, a range of characteristics, attributes, and trading styles must be deployed for success. Particular attributes in a professional trader and new trader will be noticeably different.

This article will delve into the key differences between the 'big hitters' of the trading world next to the 'average' trader.

The article will also explore what you can do differently, to up your game, and get an insight into the minds of big money movers!

If the only reason a trader trades is to make money and not to be successful, then will a trader truly succeed? We can learn how to use indicators/charts etc but we cannot teach someone the attitude, hunger and drive to succeed.

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Differences between average and expert

All traders lose, but how amateur traders lose compared to more experienced Forex traders is different. What attributes do experienced and professional traders possess that amateur traders do not? 

Big profit traders do not need the money so they have the luxury to relax, bide their time and open a position at the best time without any FOMO anxiety. There is also a pressure that comes with trying to make money today which is essential or needed.

This comes back around to the point that pro traders do not trade too hard. Without a crushing pressure to make a profit or win, there is more room for a trader to relax and conduct their proper research and enter markets at the right time.

Let's take a look at the core differences between the pros and amateurs:

  • Mentality - Successful traders view a loss as feedback. Losses can be viewed as constructive feedback. Manage your emotions in such a way.
  • Price action - Pro traders use price action/indicators/signals.
  • Don't try too hard - Not to say do not try and learn as much as you can. Reading and gathering information is essential but do not try to force it when it comes to making a profit.
  • Successful traders know when to walk away. Not overtrading or letting greed step in the way of trading with balance.
  • Pros take a step back after a winning trade. Reflect on how you are feeling and get your emotions in check. Don't let a win lull you into a false sense of security where ego can take over.
  • Don't give up and don't stop learning - Pros learn from their trades which are not profitable. Just as new traders should not be too deterred by a loss. Losses are inevitable, especially in volatile Crypto markets. Losses are to be expected but is what we take away from those experiences is what counts. Recording how we feel to reflect on later is a good way to harness emotions, learn and move forward.

Now that we have identified some key differences, let's take a look at some big names of the trading world and what they have done to gain such wealth and success.

George Soros - 'The best trader in the world!'

George Soros has been coined as the best trader in the world! To many, this sentiment is a fact.

Soros started his career at F.M. Maye before starting his own firm in 1970 - Soros Fund Management.

He famously made $1bn in a single day by shorting the GBP in 1992 in the Black Wednesday UK currency crisis and came exceptionally close to single-handedly bankrupting the Bank of England.

Here is how he did it!

Soros' specialty was predicting and sometimes forcing the catalysts to big market events. Building up to the pounds almost collapse, Soros knew that almost everyone was ready to bet against the Pound if there was some sort of bad news that would trigger a stampede large enough to overwhelm the Bank of England.

Starting in August 1992, Soros and his fund began building a position against the pound. 

Soros did this by:

  • Going to a bank or another hedge fund to borrow GBP with the promise of repaying them with added interest
  • Then go to the Forex market and sell borrowed GBP to buy German Deutsch Marks instead
  • The idea being that when the exchange rate drops, he could buy back the same GBP at a cheaper rate earning the difference as a profit.
  • By the end of August, Soros had slowly built a position equivalent to $1.5 billion against the pound

This helped Soros earn the nickname ''The man who broke the Bank of England''

All things considered, the exchange barely moved. To kick start the position he had opened and lucky for Soros, the president of the Bundesbank claimed that ''some currencies might come under pressure''. This was enough for Soros and he took his chance.

Soros has shown that waiting for the right moment to move and using fundamental analysis that fortunes can be made by markets depreciating.

He has a net worth of $8.3Bn and has donated over $30B to charity.

Stanley Druckenmiller - Mentored by Soros

Druckenmiller is a 66-year-old US national from New York. He is ranked

#145 on Forbes with a net worth of $4.7bn

Druckenmiller made a fortune as a hedge fund manager with over 30 years of success in the industry.

Druckenmiller sees Soros as his advisor and with good reason. Up until the year 2000, Druckenmiller worked under George Soros where the pair almost broke the Bank of England in 1992 by shorting the GBP. 

One of his particular traits is that he likes to be involved in one particular movement so as not to cloud judgment - investing as much positive energy as possible into one trade. This helps to keep emotions in check and maintain discipline.

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​Bill Lipschutz

​Bill Lipschutz is a full-time Forex trader and considered to be one of the world's best!

Whilst studying architecture at Cornell University, Bill Lipschutz Grandmother passed away leaving him with a tidy $12,000 in the form of a shares portfolio. Within 5 years, Lipschutz turned the initial capital amount into $250,000! 

Fast forward a short time later and the same man who amassed a small fortune over 5 years, blew it all within a few days. The point being that all traders, no matter how successful, are all human. What is evident here is that Lipschutz let his emotions take over his decision making and ultimately cost him. 

Alas, he did not simply give up. Bill was quoted as saying that during losing streaks: ''You have to work hard to restore confidence, and cutting back trading size helps achieve that goal.'' 

A resounding statement that we can all take note of.

Lipschutz picked himself back up, dusted himself down and got back to work.

Noticeable achievements include:

  • Making almost a million dollars per hour, over 6 hours trading the NZD/USD in September 1985
  • Made over $300m in 1985 alone
  • Made $20million trading JPY in 1987

What have we learned?

That it is of paramount importance to research markets and listen out for news releases that may have an economic impact on a country. George Soros is arguably the King of this.

Don't give up! Bill Lipschutz showed as that just because we are down, doesn't mean we are out!

The race can long so be prepared to be patient. Bide your time when waiting to strike.

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This article was submitted by EagleFX.

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