George Soros is one of the world’s most influential business magnates and philanthropists. He is one of the richest people in the world with a wealth estimated at $20 billion. George Soros is a professional investor who is also known as the “The Man Who Broke the Bank of England”. He got this nickname because of the $1 billion he won by short selling $10 billion in British pounds in 1992. He is famous for predicting major financial crises all over the world and making massive profits out of them. George Soros has made a lifelong study of investment bubbles and is author of numerous books and articles on different subjects such as the crisis in the Eurozone, globalization, global capitalism and others.
George Soros’ success formula
When we speak about the lessons that can be learnt from the amazing success of George Soros, we must first get an idea of his trading philosophy. Firstly, he is an investor who loves to take big risks by making short terms speculations on the financial markets. Second, the bets are made on a great variety of underlying assets, such as: currencies (Forex), stocks, bonds commodities and derivatives. And third, these bets are entirely based on fundamental analysis. Therefore his success formula includes: high risk, diversified portfolio and profound knowledge of the global financial markets.
A key component of such trading strategy would also incorporate the popular theory of reflexivity. Unlike the traditional market paradigm, which stipulates that market prices reflect accurately the underlying fundamentals, Soros' theory suggests that prices actually distort the real facts and sometimes to a significant degree. In addition, it is believed that financial markets have the ability to influence the fundamentals. In simple words, misconceptions can sometimes reinforce the trend to an extent where a bubble is created and when that bubble bursts a crisis is triggered. These insights are especially valuable for traders who make their predictions based on fundamental analysis.
Even the most successful investors have incurred losses
Traders who want to be successful need to be resilient and recover quickly from the losses that are sometimes inevitable on the financial markets. For instance, George Soros recorded two massive losses despite his undisputed financial success. In 1987, he failed to predict correctly the movement of the US markets and lost $300 million. Similarly, he lost nearly $2 billion on the Russian markets in the late 1990s. Being prepared for losses is important for traders as this can prevent you from getting discouraged and making even bigger mistakes under the influence of strong emotions.
Prepare yourself for success
One very valuable skill is the ability to recognize which trend is overrated and follow it right until the moment it reaches its peak. Be sure to act quickly because the reversal usually happens very fast and this is the time when you want to monetize on your open positions. Traders should not follow their intuition blindly, however, but rather analyze the market conditions and then take the best possible decision. Successful investors like Soros are bold and do their best to survive on the market. One of the risk management rules is to keep a big part of your capital unused so you can overcome any potential loss. Another tactic suggested by the great investor is to get a sufficient amount of rest. Reading, meditating and meeting people are all activities that replenish you and give you the strength to endure the long road to success.
Once you’ve mastered a successful trading strategy you are ready for trading live on the financial markets. With LiteForex you can trade Forex, precious metals, oil, CFDs on shares and indices, and other instruments. Simply choose a Live Account type that’s right for you, and then open an account and fund it, and you’re ready to start trading!
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.