The Forex market involves trading currencies instead of stocks and bonds. On September 16, 1992, the British pound sterling had drastically depreciated in value. Additionally, Great Britain’s inflation rate was extremely high. Currency traders saw a trend and were waiting for the right time to pounce on the Bank of England and take their profits.
Learn to Wait for an Ideal Moment to Pounce on a Trade
George Soros, along with other experienced traders, waited for the right moment. It is important to remember that George Soros broke the Bank of England during a time when Forex trading was only known to a handful of professional traders. Thanks to the now famous trade, anyone today with even a small amount of money can trade on the Forex market.
Borrowing and Selling Currencies
When the economic situation had reached an all-time low in Great Britain, Forex traders began to sell their British pounds. George Soros sold his pounds every few minutes. As the price of the pound kept falling, George Soros continued to realize more gains. George Soros stated that the $1 billion he made was based on using the forward market. He explained that the strategy was to borrow a pound, sell the same pound and then buy the pound back again upon the cessation of the loan.
Technical Analysis is not the Entire Picture
George Soros explained that he believes financial markets do not accurately reflect real situations. Traders can benefit from erroneous details. Inaccurate information helps traders achieve successful trades. George Soros does not support the idea of judging trends that are based purely on technical analysis. He shuns technical analysis because he believes that people are incapable of accurately predicting financial markets.
Forex Traders Need to have their Own Independent Views
When the topic turns toward Forex trading, George Soros believes that the markets go up and down based on the opinions of investors rather than on technical analysis. He has stated that the market is driven by emotional misunderstandings and misinterpretations. Consequently, his basic trading philosophy is to go against the common perceptions and make bets based on concepts that are outside the box.
Experienced Traders Should Go Against the Common Flow
Successful Forex traders need to understand the basic philosophy that is common to traders like George Soros. After all, making $1 billion in a day is an exception. Making exceptional trades requires methodical thinking combined with intuition. One way to achieve success is to disregard news reports that do not give accurate pictures about market conditions. While understanding trends is a legitimate strategy, people who want to make millions of dollars need to interpret events with a unique understanding that goes against the grain.
Profitable Trading is a Dull and Uneventful Activity
George Soros believes that trading is a monotonous activity. He has stated that people who enjoy trading as though it is a game are having a good time without reaping huge gains. He believes that sound investment strategies are techniques that do not excite the emotions. An excellent investment strategy is relatively uninteresting because a good trader makes trades without getting emotionally involved.
Traders Need to Cultivate Calm, Calculating Minds
Cold and calm to the hilt, experienced Forex traders do not flinch their eyelids upon hearing negative news stories and political announcements. Instead, these knowledgeable traders simply wait for opportune moments. Of course, trading in this manner is not enjoyable. The idea is tantamount to playing games in a casino in a purely intellectual fashion.
Systematic Traders Realize Profits
Traders who want to win need to go about the business of trading in a practical manner without feeling euphoric in the process. Steady, methodical trades help traders make money. Whimsical trades may lead to severe losses.
Money Management is of Primary Importance
Whether a person wants to trade stocks or currencies, learning how to manage money is a cardinal trading rule. Money management means preserving the initial cash that is in an account. Traders understand that they are probably going to realize some losses along the way. Instead of viewing a loss as a sign of emotional weakness or failure, a competent trader looks at a loss as a way to make a profit in the future. Money management helps traders gain control of their assets instead of tossing them to the wind.
Protect Trading Accounts, Secure Gains and Avoid Losses
The most important thing is to ensure that the losses are less than the gains. If the profits continue to progress, a trader will eventually overcome any losses. The old saying that patience is a virtuous characteristic is a valid argument within the experienced Forex trader’s mindset. Naturally, the opposite way of thinking is also true. If the losses continue to go higher while the profits sink lower, a person has little hope of achieving success. Traders who consistently practice money management strategies typically succeed because time is a close acquaintance.
Forget about Specific, Confining Formulas
George Soros believes that complex trading systems are doomed to fail. If a system is too complicated, there is a greater chance of making serious blunders. Learning to observe is an excellent strategy that can help a trader make greater profits and preserve potential losses. Traders need to use their charts, analyze the data and then interpret the information in a logical manner. At the same time, traders need to use their natural intuition to make accurate interpretations that are not based on emotions.
Stick to Sound Trading Strategies
One way to succeed is to create a list of personal trading strategies and follow them consistently. While it may seem as though other traders are making more money, the best thing is to develop personal techniques that do not mimic unfamiliar, complex strategies. Keeping things simple provides a good beginning on a path paved with Forex currencies.
Today’s Forex Traders have Contemporary Options
In today’s complex world of Forex trading, people can obtain helpful software and even enroll in free classes. Since George Soros, and every other professional trader, recognizes that trading involves risks, learning about proven strategies is a wise course of action. People can take classes in person or online. In addition, prospective traders can open Forex demo accounts where they can learn and practice Forex trading techniques with risk-free virtual money. Although trading on the Forex market is a risky venture, any person who is willing to try something new may benefit from the experience. Of course, it helps if the trader has a nonconformist approach in the manner of George Soros.