The foreign exchange market (also known as Forex or FX, short for Foreign Exchange) operates transactions for approximately 5 trillion dollars every day.
Behind this immense volume of daily transactions we will find the so-called “speculators”, spread across the globe and ready to attack with the end goal of profiting from fluctuations in currency prices.
The foreign exchange market revolves around fluctuations in the price of currencies such as: the US Dollar, the Japanese Yen, the Euro and the Pound Sterling. There are more exchange currencies, and in many occasions, big players have amassed their fortune by trading with them.
With the exception of the German Mark which no longer exists, we will see the most successful traders in the world trading in currencies such as the New Zealand Dollar (NZD), the Mexican Peso or the Swiss Franc.
Most forex traders keep a low profile and avoid being in the spotlight. They build their fortune in silence. In regards to how little is known about them, in an article for The New York Times, Joe Lewis said:
“I really feel that if one is successful, one of the rewards of your success is the quiet enjoyment of it.”
Lewis does not allow newspapers to put him in the headlines.
Something similar happens with Urs Schwarzenbach. When asked how it is possible that almost no one knows him in the forex world, he replies:
“Everyone has heard of George Soros or Paul Tudor Jones, why should we know precisely Urs Schwarzenbach?”
We have already revealed 2 names of the world’s 10 most successful forex traders. So, who are these major players in forex? We name them below.
1 GEORGE SOROS
THE MAN WHO BROKE THE BANK OF ENGLAND
Schwartz György was born on August 12th, 1930 in Budapest, Hungary. In 1936 his birth surname changes from Schwartz to Soros as part of an elaborate plan concocted by Soros’ father, Tivadar Soros, to hide their identities in the face of the extermination of Hungarian Jewish people by Nazi Germany.
Soros emigrated to Switzerland in 1946 escaping the soviet occupation, later emigrating to England in 1947. He worked in many different trades as he studied in the London School of Economics and Political Science. He graduated in Philosophy in 1952.
His financial career started in 1954 working as an employee for London merchant bank Singer & Friedlander.
In 1969, after working at various financial companies, he founded the Soros Fund Management company dedicated to the management of hedge funds. The firm has generated over 40 billion dollars in revenue since its creation.
In 1973 he founded the Quantum Fund, currently managed by his children, which becomes his primary trading venue.
His leap to international fame took place in 1992 by short selling anamount of 10 billion pounds sterling. His bet against the United Kingdom’s currency brought him earnings for 1 billion dollars. It is for this reason that he holds the record for being the first person to obtain the highest earnings in a single day.
The success of his short sale started being mentioned across the globe, and George Soros was dubbed “the man who broke the Bank of England”.
On September 16th, 1992 and as a consequence of this operation, the government of the United Kingdom was forced to withdraw the Pound Sterling from the European Foreign Exchange due to being unable to stay above the minimum agreed limit.
This fateful event is remembered in politics and economics as the “Black Wednesday”.
2 STANLEY DRUCKENMILLER
HE OBTAINED EARNINGS FOR 1 BILLION DOLLARS BY BETTING ON THE GERMAN MARK
He was born in June 14th, 1953 in Pittsburgh, Pennsylvania, United States. He grew up with his middle-class family in the Philadelphia suburbs.
By the end of 1980, the German Mark was suffering constant depreciations due to the serious political and social complications surrounding the negotiations for the reunification of Germany.
Druckenmiller carefully monitored the situation of the German Markand understood that the German currency was undervalued, and saw in that instant an opportunity for purchasing.
At first, Druckenmiller placed a long position in German Marks for a multi-million sum; then Soros made him increase the sale by 2 billion German Marks. This operation resulted in 60% earnings for the Quantum Fund.
3 ANDREW KRIEGER
KRIEGER VERSUS THE KIWI
After graduating at the Wharton School of Business (University of Pennsylvania), in 1986 he started working at Salomon Brothers for a brief period of time, to then join the Bankers Trust company.
His reputation as a businessman grew rapidly. This boosted trust in Krieger, and as a reward the company granted him an increase in hiscapital limit of $700 million dollars – a sum that was vastly superior to the standard capital limit of $50 million dollars.
His new bankroll allowed him to generate major earnings in October 19th, 1987 (Black Monday).
After the world panic unleashed by the plummeting financial markets, Krieger focuses his attention on the New Zealand Dollar (NZD), commonly known as “kiwi”; he believes it is overvalued and that there is an opportunity for short selling.
He uses his new capital limit and a 400:1 leverage to launch a strong short sale operation that is superior to New Zealand’s currency offer. The operation resulted in 300 million dollars in earnings for the Bankers Trust.
One year later, Krieger leaves the company in disgust after having received a bonus of only 3 million dollars for the earnings he obtained on Black Monday.
4 BILL LIPSCHUTZ
THE SULTAN OF CURRENCY
He was born in 1956 in Farmingdale, New York. He attended the Cornell University and earned a Bachelor’s Degree in Fine Arts from their Architectural Design program; at the same time he also enrolled in business classes and earned an MBA in Finance by the Johnson School of Management and the Cornell University.
He took his first steps in investments as he attended university. He started trading in risk capital after inheriting 12000 dollars from his grandmother’s death, which he quickly turned into 250,000 dollars. He then lost all of his capital due to a bad commercial decision and a turn in the markets. This loss taught him the importance of risk management, which he would then apply during the rest of his career.
In 1982 he attended the Salomon Brothers investment company training program. In May of that year he started working full time for the company.
During his training program, Lipschutz is offered to join a new department exclusively dedicated to the foreign exchange marketthat was to be created in the firm’s foreign division as part of a plan by the company in response to the increasing popularity of the foreign exchange market.
In 1984 he became the main trader in the company. A year later, Lipschutz brings Salomon Brothers earnings for $300 million dollars per year. His successful performance remained steady until he left in 1990.
5 BRUCE KOVNER
AN OBJECTIVE AND SOBER TRADER
Born in 1945 in Brooklyn, New York. It wasn’t until he was 32, in 1977, that he made his first operation. He used $3000 dollars of his MasterCard credit card to purchase soybean futures. The operation brought him $40 thousand dollars in earnings, and after suffering a fall, he closed with earnings for $23 thousand dollars.
He then claimed that this first nerve-wrecking operation taught him a tough lesson on risk management.
It is said that he was very successful in his position as an employee of Commodities Corporation, generating million-dollar earnings for the company and earning respect as an objective and sober trader.
In 1983 he founded Caxton Corporation, which would later become Caxton Associates, an asset management company that diversified its clients’ assets among the foreign exchange market, interest rates, commodities and the stock exchange.
Caxton Associates generated over 14 billion dollars at its height.
6 MICHAEL MARCUS
HE WAS ONE OF THE LARGEST FOREX TRADERS IN THE WORLD, ALONG WITH BANKS
He was part of the founding members of the Commodities Corporation company, where he was the main currency trader.
Marcus learned about managing money from Ed Seykota, who he met while working as an analyst at Commodities Corporation. A short time later, Marcus would pass on his knowledge to Bruce Kovner, who had been hired by Marcus to work as a trader at the Commodities Corporation company.
During Ronald Reagan’s presidency and with a strong dollar, Marcus held positions in German Marks for an amount of 300 million dollars. This made him the largest currency trader in the world, along with banks.
He later guessed that his position as a currency trader was what ruined his marriage, which finally ended in divorce.
He needed to know what would happen during opening sessions in Australia, Hong Kong, Zurich and London, which required his nearly round-the-clock presence.
He now stays away from the forex market, since it is his belief that currencies nowadays involve an entirely political situation in which traders are to determine the choices central banks are going to make.
7 PAUL TUDOR JONES
TRADER: THE DOCUMENTARY (1987)
His leap to fame came after having predicted the 1987 incident (Black Monday), an event that would then be portrayed by the film TRADER: The Documentary (1987), showing Jones’ prediction method.
He is a hedge fund manager known for his participation in macro trading, mainly betting on fluctuations in interest rates and the foreign exchange market.
In 2013 he obtained returns for 14.3% for his firm, Tudor BVI Global. According to investors, these earnings were possible thanks to winning bets against the Japanese stock exchange and the Japanese Yen.
8 JOE LEWIS
LEWIS AGAINST THE POUND STERLING AND THE MEXICAN PESO
He was born in February 5th, 1937 in Bow, London, United Kingdom. At 15 he had to abandon his studies to work at Tavistock Banqueting, a catering company owned by his father. A short while later, Lewis took control of the company and help in its expansion.
In 1979 he sold the family company to fully focus on the currency business. At the time he had enough money to make the decision of moving to Bahamas, a low-tax location.
From his home in Bahamas he started operating methodically in the forex market, gradually increasing his own capital limit. The size of his fortune is mainly owed to his gamble on the foreign exchange market in the early 90s.
In 1992 he participated alongside George Soros in the fall of the Bank of England. Lewis keeps the amount of money he earned on this operation private; some investors claim it exceeded Soros’ earnings.
His largest earnings, in addition to the bet against the Pound Sterling, was in early 1995 while betting against the Mexican Peso.
In 1994, Mexico was in a serious financial state due to the lack of international reserves, in addition to exhibiting an enormous and growing commercial deficit.
Lewis noticed the Mexican government was handling the situation poorly, since in his view, they weren’t protecting the Mexican peso. He quickly saw a short sale opportunity against the Mexican peso, and without hesitation he made the operation.
9 URS SCHWARZENBACH
HE OBTAINED HUNDREDS OF MILLIONS OF SWISS FRANCS (CHF) IN EARNINGS
He was born in September 17th, 1948 in Thalwil, Switzerland, and was raised in Küsnacht, Switzerland.
In 1968 he started working at the Swiss Bank Corporation, a financial services company. His first position was at the foreign affairs division, and he then joined the foreign exchange market division.
In 1972, at 24, he is sent to London in representation of the company. His father, who wasn’t too wealthy, gives him 100,000 Swiss Francs as a gift so that he could learn to trade with his own money.
Schwarzenbach used the money his father gave him on an operation with a leverage of 10:1, and obtained his first million in the foreign exchange market.
In 1976 he was already a millionaire. Encouraged by his success, he founded his own company, Intex Exchange. By the mid-eighties his company obtained hundreds of millions of Swiss Francs (CHF) in earnings, according to several trader reports. Additionally, they indicated that Schwarzenbach was a careful trader.
He has been questioned about the way he operates, to which he replies: “Bank traders make their entries for an amount of 50 million dollars, only to liquidate the position soon later for infinitesimal benefits. Instead, Urs Schwarzenbach’s personnel trades in strategic positions.”
Schwarzenbach operates with his own money; he claims: “without reporting to anyone, I can take much larger risks.”
When asked how it is possible that almost no one knows him in the forex world, he responds jokingly, “Everyone has heard of George Soros or Paul Tudor Jones, why should we know precisely Urs Schwarzenbach?”
Investors consider discretion to be his strength. Schwarzenbach says: “We are swimming against the tide. We don’t boast about our positions.”
10 MICHAEL STEINHARDT
A RECORD YIELD OF 24% COMPOUND ANNUAL GROWTH RATE FOR A PERIOD OF 28 YEARS
He was born on December 7th, 1940, and is a hedge fund manager, investor, funder, newspaper editor and active philanthropist in Jewish causes.
It was his father who got him started in the world of finance, giving him envelopes filled with money to invest in the stock exchange so that it provided him with the starting capital for his career as an investor.
Steinhardt managed to obtain a record yield that still stands out in Wall Street; a 24% compound annual growth rate for a period of 28 years.
In addition, he is known for having managed to attain this record with nearly every financial instrument: bonds, currency (Forex), stock, long and short options, and in periods of time ranging from 30 minutes to 30 days.
His worth is estimated to be over 1 billion dollars according to the Forbes Magazine.