Forex trading remains the fastest growing sector of the global financial system, with daily turnover likely to exceed $7 billion. It retreated from its April 2019 peak of $6.6 billion and is now well-positioned to expand, partially driven by a pending resurgence of retail demand. With such a highly liquid market, the remarkable expansion in online trading will experience another revolution, led by technological advances. There are hundreds of millions of traders, from governments to institutional, through FinTech and retail.
While there is adequate quantity, there is only a concentrated small exclusive group of quality Forex traders. Over 70% of retail traders manage portfolios at a loss, and an estimated 2% or less trade for a living. This article will explore the best Forex traders, identify essential traits required to succeed, regardless of trading strategy and portfolio size, to place you on the proper track to join the strived-for group of successful Forex traders.
How Do I Become More Successful at Trading?
There is no universal answer to this question, but there are several steps a Forex trader can take to become more successful. They include:
1. Knowledge and Patience
- One of the most overlooked aspects of trading. The word learning includes earning, and traders must acquire proper education before opening a live account. Trading is one of the most underappreciated professions, but it is a profession nevertheless.
- It requires patience to build a portfolio. There is no such thing as sustainable easy money. Becoming a successful trader equates to executing a strategy patiently over time.
2. Discipline and Risk Management
- Discipline is often ignored and overly simplified. Many retail traders attempt to make sense of the market according to their strategy, which is a guaranteed path to failure. Trade what the market gives you, adjust your approach, and execute it with discipline.
- Risk management is more than placing a stop loss at a fixed amount of pips away from the entry price. It required a deep understanding of the interconnectivity of global financial markets, and an active, dynamic approach. The set-and-forget approach advocated by many Forex brokers in their educational material is one reason over 70% of their retail clients lose money.
3. Courage to Go Against the Crowd
- Since successful Forex traders represent a small group of the total crowd, despite misleading marketing campaigns by Forex brokers, the courage to go against the crowd, and their belief of where a particular currency pair may move next, is essential. Today’s information age, with social media filled with advice and recommendations, attracts scores of new traders daily. The social-trading motivated crowd mentality adds to general losses for most traders, especially as the best Forex traders do not reveal their trades. Following the crowd, therefore, often results in an accumulation of unprofitable trading accounts.
The World’s Best Forex Traders
Let us take a look at three Forex traders widely regarded as some of the best ever in the field, recognized across their industry for their tremendous success.
1. George Soros
- The co-founder of the Quantum Fund is known as the man who broke the Bank of England. His now-infamous short-position against the British Pound in 1992, leading towards Black Wednesday on September 16th, resulted in an estimated personal profit of over £1 billion. Soros went against the crowd in a disciplined manner, resulting in a windfall profit from one trade. It shows that quality is more significant than quantity. “I am only rich because I know when I am wrong.” The Soros quote displays his willingness to realize errors and adjust to changing market conditions accordingly.
2. Stanley Druckenmiller
- He worked with Soros at the Quantum Fund, joining the massive short position against the British Pound in 1992, before venturing out with the foundation of Duquesne Capital. He solidified his position as one of the best Forex traders with consistent double-digit annual returns. His patience and risk management contributed to his success. Keep in mind that one of the greatest traders ever achieved “only” double-digit profits per year, next time you see marketing campaigns claiming excessive and unrealistic results.
3. Bill Lipschutz
- Known as the Sultan of Currencies, he earned hundreds of millions of dollars in profit at Salomon Brothers in the 1980s, without having previous experience with the Forex market. It shows that knowledge is essential to succeed, and there is no replacement for it. He recognized that only between 20% to 30% of trades are profitable and stressed the importance of managing a successful portfolio despite facing more losses than profits in another confirmation that quality trumps quantity in financial markets.
Here are seven more traders that deserve recognition for their excellence, discipline, patience, and courage in financial markets.
4. Andrew Krieger
- He worked briefly at Salomon Brothers, like Bill Lipschutz, before moving to Bankers Trust in 1986. He is known for booking a $300 million profit in a matter of hours on a short position in the New Zealand Dollar, using maximum leverage of 1:400, in the aftermath of Black Monday, the market crash on October 19th, 1987. After leaving Salomon Brothers, he joined Soros at his Quantum Fund.
5. Paul Tudor Jones
- The former chairman of the New York Stock Exchange, between 1992 and 1995, founded Tudor Investment Corporation after gain experience as a commodities trader. During the previously mentioned Black Monday, he managed to realize 62% in short positions and earned over $100 million in profits. He remains one of the best-known traders today and a perfect example of courage in financial markets.
6. Michael Marcus
- A founding member of the Commodities Corporation, he is known for being one of the biggest traders in German Marks in the mid-1980s. With almost $300 million in holding, he rivaled global banks. In two decades, he turned his initial $30,000 into over $80 million. It is yet another testament of discipline and patience.
7. Bruce Kovner
- He turned $3,000 from his credit card into $23,000 and went on to work at the Commodities Corporation, where Michael Marcus mentored him. Caxton Corporation, his firm, earned over $14 billion at its peak, granting him a spot on the Top 10 list.
8. Urs Schwarzenbach
- A former employee of the Swiss Bank Corporation, he was sent to London, where he turned CHF 100,000 into CHF 1,000,000, trading in the Forex market on the side. A few million later, he founded Interexchange and now owns properties and assets across the world.
9. Joe Lewis
- He quit school at the age of 15 to help in the family business, used the money to move to the Bahamas, where he traded in a tax-friendly jurisdiction. In the 1990s, he took a massive short position in the Mexican Peso. It is unknown how much he made from that trade, but his Forex career expanded from there.
10. Michael Steinhardt
- His average annualized return was in excess of 24% over 28 years, evidence that consistency is essential to the success of any trader. He lost over 33% of his portfolio during the 1994 bond market crisis, and closed his fund in 1995, before returning to financial markets in 2004 as the head of WisdomTree Investments, with nearly US$43 billion in assets under management.
How Successful is a Successful Forex Trader?
The above list noted the most successful ones, but thousands of unknown traders enjoy tremendous success. For different individuals, this translates into something else, and the only limit to success is the one you place on it. There are many profitable trading strategies out there, and you can either create your own, adopt an existing one, or modify it to your preferences.
How to Find the Best Forex Broker
Trading with the right Forex broker is just as important as having a good trading strategy. There are hundreds of entities operational, and more join the competitive sector to satisfy demand. While different traders will seek various core requirements to suit their style, below are the essential facts to consider when deciding where to trade. Many successful Forex traders operate multiple accounts at a few brokers, which can be part of a proper risk management profile.
Company History and Reputation
When evaluating the history of a company, remember that there is no guarantee that a reputable broker will remain reputable. Many list industry awards on their websites but it is important to check when they were received. With EU-member Cyprus home to many Forex brokers, the implementation of MiFID II in January of 2018 resulted in massive changes. Always be wary of reviews and comments, as the majority are false and misleading, often sponsored by brokers.
Regulation and Security
Trading with an unregulated broker is not recommended. Since MiFID II, non-EU regulated brokers grant traders a competitive edge. Ensure the segregation of client funds that client funds and that an insurance policy in the event of default by the broker exists. Once you exceed the maximum deposit cover, you can always open a second account with another broker, keeping your capital 100% ensured until you exceed a certain threshold. Diversification is essential to secure your money.
Broker Costs, Spreads, and Forex Leverage
Read and understand the trading conditions offered by the broker. The cost structure, often a combination of spreads and commissions, together with the correct leverage, will be essential to the outcome of your trading operations. Successful traders either seek out raw spreads, as granted by ECN brokers, with a competitive commission or tight commission-free spreads, depending on their trading strategy. Leverage is critical and is used in conjunction with risk management. Brokers used to grant leverage up to 1:500, and this is still available at many brokers headquartered outside the E.U., U.S., and Canada.
Diversification will fulfill a central part of your risk management strategy, while proper market coverage results in more trading opportunities. Check the available asset list with a focus on Forex pairs. Anything greater than approximately sixty assets represents acceptable market coverage.
The best trading platform for most retail traders is the MetaTrader 4 trading platform, due to its extensive suite of third-party application developed over the past fifteen years. It fully supports automated trading solutions and can be modified to fit any trading style. Almost every broker offers it, adding to the accessibility of it. MetaTrader 5, referred to as the failed successor platform, should be avoided, while numerous proprietary trading platforms are available. Feel free to try the demo versions and find the one that suits you the best. Mobile trading apps are advertised and popular among retail traders. Bear in mind that successful Forex traders do not trade on them, as they are unsuitable tools with which to conduct a proper analysis.
Some brokers offer better conditions to traders in their standard account, as it is more profitable for them. Equal access for all clients from the identical account type is a trend slowly gaining traction. Where various account types exist, retail trades with less than $10,000 should consider a mini account. Micro accounts are not widely available, but a superior choice for educational purposes over demo accounts. Ensure that the minimum transaction size is 0.01 lots, that order execution types allow you to manage positions properly, as available in MT4, and that the broker reports execution statistics under Pillar III disclosures. The account opening process, per industry standards, takes place via an online application followed by mandatory account verification for regulated brokers.
Many brokers offer bonuses as an incentive to trade. While these can be useful for committed traders focused on growing the account balance over time, most traders misunderstand them. Read the applicable terms and conditions before considering them, and only apply for one that is withdrawable over time without any time limit. It usually requires high trading volume, but if you implement a long-term plan, are patient, and disciplined, they can offer an acceptable boost to your trading strategy.
Tools and Features
While this is secondary, a broker offering an outstanding education section displays care about the success of traders. It is wise to check the quality of the educational material, as many provide poor quality content for marketing purposes only. There is plenty of valuable material online available for free. In-house research is another feature of interest for new traders, but you do not have to trade on it. View it as an effort by the broker to assist. Sometimes you can find ideas worth exploring. An upgrade to the standard MT4 trading platform, as provided by some brokers, should be favored. Traders who deploy automated trading may want to ensure the broker offers VPS hosting free of charge.
Bank wires and credit/debit cards form the core of deposit/withdrawal options. It may not be suitable for you, and there is a plethora of third-party payment processors. Financial management will fulfill a more prominent role as you progress. Note the costs for withdrawals, processing times, and locate a broker that supports your preferred option. Ensure that your capital is always accessible with no questions asked. Reputable brokers will never question or delay a withdrawal request.
Customer Support and Customer Feedback
Most traders will never require customer support, especially at a well-managed broker, but having swift access to it in case of an unforeseen emergency is recommended. Approach customer feedback with caution, as you do not know who is behind it and what the motivation is. Most reviews are driven by new retail traders who failed to understand the terms and conditions of bonuses or by broker-sponsored comments.
Difference between an ECN/STP broker and a Market Maker
ECN/STP brokers grant you access to raw spreads and charges a commission per trade while filling your order in the open market. A market maker usually offers commission-free trading for a potentially unacceptable mark-up and is the direct counterparty to your position. Your trading losses are profits for the broker, and your trades are often filled in an internal order book, never reaching the open market. True ECN/STP brokers do not benefit from your losses, while market makers are known to manipulate orders and hunt stop losses of traders to increase their profits.
Regrettably, there are many scams in the Forex industry. Brokers make misleading claims about regulation and deploy marketing tactics to distract from unacceptable trading conditions. Self-proclaimed mentors offer education for a fee, signal providers manipulate results, and free automated trading solutions generally fail after a brief period of success. You can easily avoid scams by checking the information published by brokers, never pay for education, and do not blindly trust any free expert advisors (EAs) or other well-marketed solutions. Whenever you feel uneasy or pressured into a deposit, trade, or purchase, walk away. The best Forex traders do not share their strategies and only mentor those employed by them. Trustworthy Forex brokers never contact traders with offers.
Becoming a successful Forex trader is an achievable goal, but it requires a specific skill set and approach. The best Forex traders understand that going against the crowd is an essential element of success. Therefore, the first step is to invest time in education, and build a strong knowledgebase from which you can create a trading strategy. Do not be afraid to be different from conviction, as successful traders are in the minority. Practice discipline and patience, have realistic expectations, find a trustworthy broker, be courageous, but do not neglect risk management. Treat Forex trading as a profession, and together with the character traits outlined in this article, you will possess the required tools to succeed. The rest is entirely dependent on you.
Who is the best Forex trader?
George Soros is probably regarded as the best and most profitable Forex trader of all time, but others may have enjoyed less publicity but been even better.
How much do top Forex traders make?
Top Forex traders generally achieve double-digit returns per year. Consistency remains essential, but an annualized profit between 15% and 25% is considered excellent.
Are there profitable Forex traders?
Yes, but they are in a minority. Less than 30% manage profitable portfolios with an estimated 2% trading for a living.
Can you be successful in Forex trading?
You can be successful if you adopt the right mindset, develop the proper characteristics, and exercise patience and discipline. Misleading marketing campaigns by Forex brokers create the impression that small deposits with high leverage and minimal risk management will yield profitable results. Tacking the Forex market under these assumptions is why most retail traders fail.