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George Soros is one of the wealthiest men in the world. Not only that, he’s one of the most generous billionaires as well, having donated more than half of his original fortune to the Open Society Foundations.
Aside from being the founder and chairman of Open Society Foundations, Soros is a pioneer of Forex trading. If it wasn’t for his influence, it’s highly doubtful that Forex would be as accessible as it is today, and brokers like Oanda.com wouldn’t be as renowned as they are.
As one of the world’s foremost experts on all things Forex-related, Soros is an ideal role model to look up to if you’re interested in becoming a Forex trader. However, before we take in his wisdom, let’s take a brief look at the history of the man himself, and attempt to gain a better understanding of what drives such a charismatic individual.
Past to present
Referred to by many as “the man who broke the Bank of England”, Soros is responsible for several noteworthy Forex trades. His nickname, for example, refers to a trade that was made in 1992, when Soros managed to short the British Pound against the US Dollar, walking away with around $1 billion in profit.
Soros’ experience with trading began in London back in 1954. After working at several financial service providers, he quickly gained a reputation as a proficient arbitrageur. By 1963, he reached the position of vice-president of a New York-based investment bank.
In 1973, Soros set up the Quantum Fund which is one of the most successful hedge funds in history, having generated over $40 billion since it was founded. It continues to hold the majority of Soros’ wealth, which has been used to fund various progressive causes worldwide.
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Philosophical philanthropy
Due to his passion for philosophy, Soros created a theory for capital markets called the General Theory of Reflexivity. In essence, the theory points to investor bias as the cause of disequilibrium in capital markets.
Reflexivity is based on three main aspects, the first of which states that equity leveraging and speculator trends can cause markets to rise and fall. The second aspect is a reminder that reflexivity is based on probability, while the third aspect defines investors as primary market influencers.
Why have we gone through the trouble of trying to understand Soros’ theory? Because Soros attributes a significant part of his financial success to his understanding of reflexivity.
Soros’ investment style can be described as conscientious yet instinctive. His ability to understand both global and regional trends is due to decades of experience in global markets, and he has used that experiential knowledge to great effect.
We’ve already mentioned his renowned short from 1992 that led to his nickname, but there are other examples of Soros’ ability to combine instinct with the knowledge he has gained. In 1997, for instance, Soros earned close to $800 million by going short on Thailand’s baht, and he made $1.4 billion against the Yen in 2012.
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Forex strategy
When talking about Forex, Soros is unashamed to admit that a generous amount of capital has given him significant risk tolerance. This has allowed him to leverage high bets that can take advantage of market inefficiencies.
In multiple interviews, Soros emphasizes that a trader must recognize their mistakes, be flexible when it’s needed, and keep emotions out of decision-making as well as investment progress. Greed and fear tend to drive the most significant global market fluctuations, but there are always a handful of ‘safe haven’ currencies such as the US Dollar, the Japanese Yen, and the Chinese Yuan.
No matter who asks him about Forex, Soros always stresses the importance of learning from mistakes. Traders must understand that the Forex market is unpredictable. The most significant financial gains can only be gained by betting on the unexpected and catching early trends.
According to Soros, investing in Forex is not meant to be exciting. It should be fortified with the utmost due diligence, and traders should keep a personal record of all their transactions. Additionally, in order to adhere to regulations and legal requirements, traders should be well-versed in any and all legislation related to Forex.
End Word
A critical piece of evidence to consider is that building wealth takes time. Despite several large gains over his career, it took Soros decades to build his philanthropic empire. He did this carefully, optimizing his gut reactions by taking control of his emotions and working on his self-awareness.
Early on in his life, Soros realized the fact that wealth doesn’t come overnight. Dipping in and out of trading might provide financial benefit now and then, but prospective traders can only gain wealth by performing a meticulous study of Forex trade and world events in equal measure.
