Updated 21 August 2020
The forex (foreign exchange) market is highly accessible thanks to its low entry barriers and the high leverage (borrowed capital) available. This makes it popular with novice traders investing small deposits for modest returns, as well as more experienced traders.
Trading forex successfully is difficult and does not happen overnight. However, for those willing to put in the time and effort, and to take the necessary calculated risks, it is possible to get rich trading forex.
In this article we will introduce some of the world’s most successful and well-known forex traders, examining how they made their fortunes and exploring what you can learn from their achievements.
We also suggest some training courses that could help to set you on the path to a lucrative career trading forex.
While it is possible to trade forex on a small scale alongside a day job or other commitments, if you want to make significant trading profits you will need to devote more of your time to the markets.
A professional forex trader is generally considered to be someone whose primary income is derived from trading on the forex market. They may work for themselves, investing their own capital, or they might work for hedge funds or international banks, trading with clients’ money.
Those working for an employer receive a salary which can range from around £45,000 to upwards of £150,000.
The average income of someone trading on their own behalf is harder to quantify because forex is so decentralised and trading budgets vary widely. As a rough guide, a professional forex trader would consider themselves successful if they were achieving around a 20% return on their capital.
Different forex traders will have different definitions of success, so you must understand what you want to achieve from your trading and set yourself realistic goals.
If you can consistently generate a monthly profit trading forex then you are doing well. However, if you want to get rich, it is worth looking to those individuals who have achieved the most remarkable forex returns:
George Soros was born in Budapest in 1930 and survived the Nazi occupation of Hungary before emigrating to the UK in 1947, where he attended the London School of Economics. He began his career working for merchant banks in the UK and US and then started his own hedge fund, Double Eagle, in 1969. This was later renamed Quantum Fund.
In 1992, Soros became known around the world as ‘the man who broke the Bank of England’.
At the time, Britain was part of the Exchange Rate Mechanism (ERM), which was set up to create a more stable monetary policy across Europe and to make exchange rates less variable.
Under the terms of the ERM, the British Government was required to intervene if the pound fell below a certain level compared to the German Deutsche Mark.
Soros foresaw that the Bank of England had been left vulnerable thanks to a combination of factors, including Britain’s high interest rates and high level of inflation.
As the value of the pound depreciated, Soros built up a huge short position in pounds sterling through his Quantum Fund. Following his lead, other traders also started betting against the pound.
On Tuesday, September 15th 1992, Soros began selling off vast amounts of sterling, causing its value to drop even further.
The following day, the Bank of England started buying up pounds in an attempt to prop up the currency, but as Soros continued to flood the market, the Bank’s plan had little effect.
That evening, the government announced that Britain would leave the ERM. The date, September 16th 1992, became known as Black Wednesday.
Soros made a reported profit of $1 billion in the process and earned a place in history.
To this day he is still recognised as one of the world’s best forex traders.
He is a proponent of the theory of reflexivity, a belief that investors’ perceptions of the market affect prices, which in turn influence how investors perceive the market. This was illustrated to dramatic effect in the run-up to Black Wednesday.
Bill Lipschutz began his trading career in the late 1970s while still attending Cornell University in New York state. He made over $200,000 in that time but lost it all in one bad trade, learning a hard but valuable lesson in risk management.
He joined the investment bank Salomon Brothers in 1982. Forex markets were just taking off and Salomon Brothers had formed a new foreign exchange division which Lipschutz was asked to join.
He was an instant success, and by 1984 had become the principal forex trader for the firm. By the following year, he was reportedly making $300 million a year for Salomon Brothers.
He stayed with the company until 1990 and then went on to hold several other positions in foreign exchange. In 1995, he founded Hathersgate Capital Management with some of his former classmates from Cornell, where he remains principal and director of portfolio management.
Lipschutz is often known as the Sultan of Currencies. Like Soros, he believes in the theory of reflexivity, describing forex as a psychological market. He also stresses the importance of risk management, and of recognising that you will often make the wrong decisions when trading forex.
Stanley Druckenmiller joined Pittsburgh National Bank as a management trainee in 1977 and quickly rose to become the bank’s head of equity research group.
In 1981, he set up his own company, Duquesne Capital Management. He then went on to work for George Soros for many years, taking the role of lead portfolio manager for Soros’ Quantum Fund and working with Soros on his famous short-selling of the British pound in 1992.
He was featured in the best-selling book, The New Market Wizards, by Jack D Schwager, and survived the economic collapse of 2008.
However, he subsequently closed Duquesne Capital Management, announcing that the constant pressure of living up to his own success had taken a ‘high emotional toll’. His net worth has been valued at more than $4 billion.
Like Lipschutz, Druckenmiller’s approach to forex trading revolves around recognising that you will be wrong much of the time. He emphasises the importance of making the most of the times when you are right and minimising damage when you get things wrong.
These three traders have shown that it is possible to become very rich trading forex, but discipline and courage are required. The traders mentioned above also demonstrated a strong understanding of risk management, as well as an ability to interpret how perceptions are likely to shape the market.
While learning from their achievements, it is also important to remember that there is no one perfect strategy for trading forex. You will need to develop a plan that works for you.
The first step towards becoming a successful forex trader is developing a thorough understanding of the market and using this to draw up a confident and well thought out trading strategy.
If you are new to the sector, it is a good idea to consider taking a course.
This will give you the tools and techniques you need to get started, and also help you to understand if forex trading is right for you.
The three courses below will all give you a good grounding in the basics of trading forex:
This free online course is provided by Admiral Markets, a leading forex broker, and is available in 18 different languages.
The programme consists of nine video lessons focusing on key forex topics. The lessons are delivered by two industry experts and also come with detailed written notes.
At the end of each lesson, there is a quiz to test what has been learned.
The course is designed to help even complete beginners and can be accessed from anywhere at any time. The lessons are split into three stages; beginner, Intermediate and Advanced, with three video lessons in each.
The beginner stage covers basics such as key terms and how to set up your own demo account. These first three lessons are available to anyone, but if you want to progress to the next stage, you will then need to sign up for a demo account with Admiral Markets.
In the intermediate stage, you will learn how to set up a trading platform, make a demo trade and start thinking about a trading strategy.
The advanced stage covers trading plans in more detail, how to use vital indicators and risk management.
This course is available on the online learning marketplace, Udemy, and is aimed at both beginners and more experienced forex traders.
It consists of 5.5 hours of video and four articles.
It is available on-demand and you will receive a certificate of completion.
The course is priced at £194.99 but Udemy frequently runs sales and special offers. Once you have purchased the course you will have lifetime access, which includes any new lessons added to the course.
The course covers topics such as:
Learn to Trade is a forex training specialist based in London, which offers a range of courses teaching people about the forex market.
It runs free two hour workshops at locations across the UK, as well as webinars. It also provides longer paid-for courses at its office in Fulham, which incorporates a dedicated classroom suite and trading floor.
The free workshops cover the basics of forex such as:
The two-day training courses cover forex trading in more depth, including:
You will also receive a one-to-one mentoring session from an experienced trader.
To take this course, you will need to use Learn to Trade’s trading software, SmartCharts.
Only a very few will ever make billions trading forex. However, the success of the top traders shows that you can get rich trading forex.
Even the best traders will lose money sometimes, but if you can start to regularly turn a profit, then you are well on your way to success.
By learning from others’ achievements and putting in place your own thoroughly researched trading strategies and risk management systems, you could start to make yourself a healthy income in no time.
WikiJob does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
You might also be interested in these other WikiJob articles: