Every wanted to know who the really, really, really big traders are in the forex markets? We did, so we did a whole lot of research to compile this list of the top 5 forex traders of all time, and included some of their mind boggling trades. These traders were mainly active during the 80′s and 90′s when the foreign exchange markets opened up to more traders and individual traders started to shine at places like Salomon Brothers and The Quantum Fund.
#1 – BILL LIPSCHUTZ
Bill Lipschutz grew up on Long Island in New York State. He is said to have been a great student, particularly excelling in mathematics. Lipschutz attended college at Cornell University where he earned a B.A. in Fine Arts. He then enrolled at Cornell’s Johnson School of Management and received his MBA in Finance in 1982.
While he was a student at Cornell, Lipschutz inherited $12,000 in stock. Lipschitz began actively managing and reinvesting his newly inherited stock portfolio. During this period of his life he is sad to of had a voracious appetite for anything he could read about the stock market, investing and trading including foreign exchange trading. In later interviews it was revealed that Lipschutz managed to increase the value of his initial inheritance from $12,000 to about $250,000 only to lose almost all of it when the markets turned. No doubt, the loss informed his approach to trading and investing in the future.
At Cornell, Lipschutz was an intern for Henry Kaufman, an Economist at Salomon Brothers and he went on to join Salomon Brothers full time following his graduation. Early in his career with Salomon Brothers, Lipschutz joined part of Salomon’s new Foreign Exchange Trading department.
At the time of Salomon’s first foray into forex, the bulk of foreign exchange trading was done on the Philadelphia Stock Exchange. It was not long before Lipschutz became an important trader at the Exchange. At his most active, half of the forex options on the Philadelphia Exchange were attributed to Bill. Even more remarkable, during the same period, Lipschutz also accounted for 8 out of every 10 open forex future contracts on the Exchange. One trade in 1986 put more than $500 million on the movement of the British pound, a move that attracted plenty of financial press. He made use of the Philadelphia Stock Exchange to make over $300 million in profit for his broker-dealer in 1985 alone.
Lipschutz became the Salomon’s principle forex trader from 1984 until he left Salomon’s in 1990. In 1988 Lipschutz became a Director at Salomon Brothers and head of its New York Foreign Exchange Trading Desk.
Lipschutz then formed Hathersage Capital Management Inc. (now LLC), which describes itself as a “Discretionary Active Currency Management” company. Lipschutz remains the Director of Portfolio Management at Hathersage where he has overseen 16% average annual returns and an overall 1600% return over the last 19 years. According to the company’s press releases, Bill Lipschutz wanted to downsize his organization when founding Hathersage. Today the company only has seven employees all of whom are former colleagues from Cornell or Salmons or just friends. Lipschutz primarily trades in front of a handful of trading screens from home which is a large apartment in New York’s NoHo district. Hathersage trades about $200 million dollars on behalf of about 14 different clients. In October of 2006 he became the 12th member of the Trader Monthly Hall of Fame.
More on Mr. Lipschutz can be found in the books “The New Market Wizards: Conversations with America’s Top Traders” and “The Mind of a Trader: Lessons in Trading Strategy from the World’s Leading Traders.”
#2 – ANDREW “ANDY” KRIEGER
Andy Krieger attended the University of Pennsylvania, graduating from Wharton Business School. At Wharton, Krieger was a student of James Orlin Grabbe. Grabbe wrote the text book International Financial Markets which is the textbook on derivatives trading. Grabbe also invented the term “regulatory arbitrage”. Grabbe’s teaching no doubt had an influence on Krieger’s future career as a trader.
By 1984, he had moved to Salomon Brothers, then on to Bankers Trust just two years later. While at Bankers Trust, following Black Monday (1987), he sold short the Kiwi (New Zealand Dollar) in such large amounts (estimates ranging from $600 million to $1 billion) that he actually exceeded the then-current money supply of New Zealand. His profit on the transaction amounted to $300 million.
Mr. Krieger then moved on to Soros Fund Management in early 1988. He has since gone on to Northbridge Capital Management, Inc. In 2005, he included $350,000 of his own money to jumpstart a relief fund for the victims of the 2004 Christmas Day Tsunami.
Mr. Krieger is the author of The Money Bazaar: Inside the Trillion-Dollar World of Currency Trading which is a good overview of the history of foreign exchange trading and provides some insight into how currency trading works.
#3 – JOHN R. TAYLOR, JR.
John Taylor attended and graduated with a political science degree from Princeton University before starting out as a political analyst at Chemical Bank. The following year, 1970, he was named the foreign exchange analyst of that bank. He made acquaintances with a number of traders on the floor of the Chicago Mercantile Exchange (CME) during this time.
Mr. Taylor founded FX Concepts in the early 1980’s and still runs it to this day, making him one of the longest-running currency managers of the same fund. In 1985, he gained notoriety for taking advantage of the U.S. Dollar’s decline against the German Mark at a substantial profit. He has maintained favorable positions in the Argentine Peso (2002) and other far-flung currencies (including the Indonesian Rupiah, the South African Rand, the Norwegian Krone, and the South Korean Won).
Mr. Taylor is also credited with developing the first computer models designed to help companies manage foreign exchange risk. More recently, he is credited with managing $250 million in his top ten hedge fund in 2008. As of the middle of 2010, he predicts that the bullish prognostications of the past several months are misplaced, and the US economy is headed for rough times for a while longer.
#4 – STANLEY DRUCKENMILLER
Stanley Druckenmiller received his Bachelor’s degree from Bowdoin College before starting at the Pittsburgh National Bank as an oil analyst. He left Pittsburgh National and created Duquesne Capital Management in 1981, then went to work for George Soros seven years later, where his trades provided average returns of 30% over several years at the Quantum Fund.
In 1989, after the fall of the Berlin Wall, Mr. Druckenmiller held long the devalued German Mark, subsequently watching the Mark’s rise as German Reunification fears became recognized as overstated. Druckenmiller finally left his mark when he and George Soros made $1 billion on the devaluation of the British Pound in 1992. This event is known as the “Breaking of the Bank of England.”
Mr. Druckenmiller returned full-time to Duquesne Capital in 2000 (which he had started in 1981, before moving to the Soros Fund). More recently he ran a nonprofit that provided educational services to adults and children.
#5 – GEORGE SOROS
George Soros graduated with a Bachelor’s degree from the London School of Economics. He is most famously known as “the man who broke the Bank of England” after short selling the pound sterling in the amount of $10 billion. That trade also made him well known for being the first person to make $1 billion in just one day. He has repeatedly been ranked by Forbes as one of the world’s richest people. In 2009 his net worth was estimated to be $11 billion.
Mr. Soros is the author of several books, his most recent being “Invest like a Billionaire: If you are not watching the best investor in the world, who are you watching?” Also a philanthropist, he is estimated to have given away nearly $7 billion of his own money over the past 30 years. A number of his charitable projects have been aimed at promoting peaceful transitions for eastern European states toward more Democratic-leaning governments.
Mr. Soros is said to have called on some form of government regulation to curb what he believes is the tendency for people’s emotions to distort their investing decisions and therefore the markets.
So much has been said and written about George Soros. He is a fascinating study and we recommend Michael Kaufman’s study of the man in his biography Soros: The Life and Times of a Messianic Billionaire.