What can you learn from the best forex traders?

Forex trading successfully takes skill, and the best forex traders are not only decisive and have extensive knowledge of the market, but they’re intuitive, since their experience has afforded them this ability. What’s important to remember with forex trading is that there’s no ‘one size fits all’ approach or strategy, as the way that you trade will be individual to you and will depend on a variety of things, including how much capital and time that you can invest in forex. To become a successful forex trader, you’ll have to be tactful, knowledgeable and be able to utilise an array of risk management tools and market indicators, which you can access on most online forex trading platforms. 

When learning to play a new instrument or sport, you would seek out a professional, or the best players that you know, so that you can learn from someone who is great at what they do. Forex trading is no different and there’s plenty to learn from the best forex traders, and we will let you into some of their secrets and top tips in this article. 

George Soros

George Soros is one of the most successful forex traders in history. He’s hailed as the man who broke the Bank of England, with a trade that he made in 1992. This particular trade saw Soros reign in a net profit of $1 billion, which he made by selling an estimated $10 billion in pound sterling (GBP). 

We’re all familiar with Black Friday, but have you ever heard of Black Wednesday? If you have then you’ll be impressed to hear that this day is dedicated to the events that took place on 16th September 1992, where the UK were forced to withdraw currency from the European Exchange Rate Mechanism, because they were unable to cope with the effects of Soros’ trade on the market. 

So, what can we learn from Soros? Soros’ approach required short-term speculation, since his strategy was to make huge predictions on the direction of the forex market and effectively bet on the outcome that he believed most likely. Of course, we don’t recommend that you apply such a high-risk strategy to your trading approach, but Soros made these predictions based upon his vigorous study of the market, watching other trader’s moves closely to help him decide what his next move would be. He called this strategy ‘reflexivity’ and is based on the idea that market sentiment is the biggest influence on the landscape of the forex market. 

Andy Krieger

Another one of forex’s most successful traders is Andy Krieger, who focussed his trading efforts on the New Zealand dollar (NZD). Krieger prioritised this currency because he noticed that in times of economic crisis or market panic, traders tended to short-sell the NZD. 

Traders can utilise leverage to enable them to open a larger position in the forex market without using so much of their own capital. Krieger took this to a whole new extreme applying a 400:1 leverage to his trading limit. This position did in fact exceed New Zealand’s supply of capital, but saw Krieger earn a net profit of $300 million. 

Krieger’s approach might look like a massive gamble, but in actual fact, his success in the forex market can’t solely be attributed to luck. Krieger’s strategy is firmly routed in the fundamental analysis that he carried out and his thorough monitoring of the market, in order to identify which currency was overvalued. Of course, you could apply such an approach to your own trading strategy, but could also employ tools like momentum indicators and trend indicators, which will help you to identify overbought or oversold currencies, and pinpoint patterns in the market.