Of the few, great, Foreign Currency Traders who have made it to the top by earning millions and in some cases billions of dollars, Bill Lipschutz certainly comes out in front of a rare breed of winners.
“It’s very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you’re doing if you’re a successful trader” [Bill Lipschutz – quote]
Many currency traders keep under the radar when it comes to putting themselves in the spotlight of trading success. This is because they know that trading forex is not a quick or straightforward method for making millions, and there are risks involved.
The Lipschutz rising star began in the late 1970s, while he was at Cornell University, studying architecture of all the obscure starts to forex trading, this one takes the biscuit, and where he took his trading account, using $12,000 that he had just inherited, to a very acceptable $250,000.
What people might not know is that it only took one single hard-earned lesson in bad risk management to bring about complete failure; the entire $250,000 bankroll was lost in a single, lousy trading decision.
This failure that would have turned many people into a quivering wreck made Bill Lipschutz more confident of his own ability and determination to succeed; a character trait that repeatedly appears, with the most famous and most wealthy currency traders in history.
After this initial setback, Bill Lipschutz joined the team of currency traders at Salomon Brothers and was soon bringing his successful trading strategy as a lead trader on the firm's forex account, to earn the company $300 million during 1985.
What is Bill Lipschutz Worth
No one knows how much Bill Lipschutz is worth, but since he is considered one of the top-five forex traders of all time, it would be safe to say that he is extremely wealthy, and a billionaire!
Bill Lipschutz Winning and Losing Forex Trades
What many people don’t know is that he has had a chequered career of trading highs and lows.
New Zealand Dollar: In 1987, in six hours of forex day trading Lipschutz raked in $6 million trading NZD USD
Japanese YEN: In 1987, Bill Lipschutz added $20 million to the Salomon Bros. bottom line when he traded the Japanese Yen. It was the year when many of the forex trading greats, like Soros and Druckenmiller , went after the Japanese currency.
German Mark: in 1988, Bill Lipschutz entered the forex feeding frenzy when he shorted the Deutsche Mark by a massive $3 billion. This trade found him on the wrong side of the deal with no liquidity to buy his way out of trouble when the US Dollar began to increase in value against the D-Mark.
In 8 minutes during the New York Trading Session, Lipschutz found himself following a paper loss of $30 million, which rocketed to $90 million. However, by keeping his wits about him, Lipschutz was able to find liquidity in Tokyo (Asian Trading Session) and came out of a nasty bout of poor trading with only an $18 million loss.
Bill Lipschutz Trading Quotes
Bill Lipschutz is well known for handing out gold nuggets of information when asked about Forex Trading. Here are some of this canny trader’s most famous media quotes:
- "When you're in a losing streak, your ability to properly assimilate and analyse information starts to become distorted because of the impairment of the confidence factor, which is a by-product of a losing streak. You have to work very hard to restore that confidence, and cutting back trading size helps achieve that goal."
- “I don’t think you can consistently be a winning trader if you’re banking on being right more than 50 percent of the time. You have to figure out how to make money being right only 20 to 30 percent of the time.”
- "If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money."
- “Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on. Some people say, “I was only playing with the market’s money.” That’s the most ridiculous thing I ever heard.”
- “It’s very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you’re doing if you’re a successful trader.”
Six Key Trading Practices
- Thoroughly and systematically, calculate every trading idea before placing a trade.
- Develop your trading position as the market moves your way and be sure to get out the same way.
- Be ready to ease up or change your strategy if there is any sign that the price action or fundamentals (trading principles) are changing.
- Identify the market’s focus before you make your move to trade
- Foreign currency is traded 24 hours a day around the globe which can be extremely advantageous; when a trade in one exchange is going badly to even the score by buying or selling in the opposite direction on the other side of the world.
- Timing and risk management are vital:by choosing the correct trading volume and setting the proper exit strategy.
Bill Lipschutz has been a fundamental trader who is passionate about trading and who makes a thorough study of political events and macroeconomics for every currency before entering a trade. By not losing sight of the fundamental resistance and support levels he gives himself a better and broader market outlook, making it possible to identify turning points, which are the entry and exit positions that every successful trader uses.
Lipschutz has stated often enough that one of the most significant risk factors for forex traders is "time" and for this reason, he ensures that he adjusts his profit to loss ratio to fit the duration of every trade.
Many people who have followed the FX career of Bill Lipschutz know that there are no short cuts and the lessons learned from losses have amplified his efforts to put in the time to learn his craft, although he does admit that a certain degree of luck often runs along with his phenomenal success.