Throughout history, the financial markets have seen famous traders who have made considerable fortunes and, in some cases, lost a lot of money. These stories show us a great diversity of human emotions – ambition, greed, fear and sometimes madness.
Some of these traders achieved incredible returns with consistency, while others (the rogue traders) lost fortunes on stupid trades by taking uncalculated risks.
These stories can be entertaining and, in some cases, also serve as a warning. We hope they will be inspiring to you as a beginner trader or seasoned one. Always keep in mind that all these traders managed to overcome many adversities on the market but never gave up.
In 1986 Andy Krieger joined a hedge fund called Bankers Trust after leaving Salomon Brothers.
Although he is quite an aggressive trader, thanks to his success, the company has increased its capital limit to $700 million. That was pretty impressive compared to the company’s standard $50 million limits. Fortunately for the company, Krieger was able to make extensive use of capital during the Black Monday crash of 1987. By selling short the New Zealand dollar, which he believed to be very vulnerable to the whole financial crisis, Krieger used 400:1 leverage up to his already high-risk limit.
Thanks to this leverage, Krieger’s short position was larger than New Zealand’s money supply.
The trade resulted in a win, and it netted $300 million for the hedge fund. After leaving the hedge fund a year later, he said he made more than $3 million from the trade, which is about double today’s currency market.
Soros became a legendary forex trader thanks to trade against the pound sterling, which would have brought him a billion in one day and caused the fall of the British currency. The fortune of his family amounts to 25 billion, which are managed by his investment fund “Quantum” corporation.
Mark Douglas is one of the foremost writers of trading psychology literature of our time. As Mark Douglas says, the first thing you need to learn as a trader is to stack the odds of success in your favor. In other words, you need a high probability trading edge. But, remember, a trading edge is simply a higher probability of one thing happening over another, over a series of trades. It is not 100% sure that you will make money from the markets. You must combine this advantage with the appropriate mental skills.
Homma Munehisa Homma
Homma Munehisa Homma invented candlestick charts and trading candlestick patterns. He is popular as the father of technical analysis and price action trading. Legend claims that Homma earned the equivalent of today’s $10 billion by speculating on rice.
Charles Dow Charles Dow
Charles Dow Charles Dow was not a trader but a journalist who impacted the foundations of our modern financial market. He is the source of a theory known to all investors, the famous Wall Street Journal and the first stock market index in the world, the Dow Jones Industrial Average.
Bruce Kovner started trading with the famous Commodities Corp, and it was the place where he met one of his biggest influences, Michael Marcus. From taxi driving to running a hedge fund, Caxton Associates, since 1983, Kovner’s fortune reached a value of $5.3 billion in 2016.
Jérôme Kerviel, the former trader of Société Générale, is responsible for a record trading loss of 4.9 billion euros. On October 24, 2012, the Paris Court of Appeal sentenced Jérôme Kerviel to five years in prison. Two of which were suspended, incurring 4.9 billion euros in damages.