As the title of this chapter indicates, it is not only technical analysis that enables the accomplishment of profitable operations on the Forex. Indeed, it is important to remember that the Forex market is very reactive to information. However, only very good traders succeed in making large profits without the need for technical indicators, by simply anticipating the trends using current events. In fact, this is the way that the best Forex trading operations were completed.
Here, we will cite 3 traders that became internationally known following the games of “poker” which they managed to carry out.
The fabulous success of Georges Soros:
This story took place in England in 1992. At that time, many financial press articles mentioned the entry of England into the euro zone. It appeared clear that if England refused, its currency, the Pound Sterling, would be automatically depreciated. It therefore seemed obvious that the decision of the government would be to go in the euro direction. However, a trader named George Soros preferred to speculate everything on the opposite. This founder and leader of Fund Quantum (the largest hedge fund in the world) then decide to sell for 10 billion GPB. Whereas the Bank of England lost its energy by trying to stabilize the Pound Sterling, it liquidated nearly all of its foreign currencies to counterbalance this massive sale executed by Soros. Finally, it was George Soros who won the battle on the 16 September, 1992 when the Bank of England had exhausted all its funds. The prediction of Soros then became a reality as the Pound Sterling literally dropped, allowing him to pocket a billion dollars, and all in only one single day.
Stanley Druckenmiller and the fall of the Berlin Wall:
The founder of Capital Duquesne in 1981, he was in the same class as George Soros. Druckenmiller owes his financial success to an event known by all, the fall of the Berlin Wall! Indeed, using his intuition, in 1989 he decided to buy more than 2 billion Marks in preparation for this planetary event. His prediction was based on the idea that the fall of the wall and therefore the reunification of both Germanies would cause a rally on the German currency.
The profits made on this trade were unfortunately never communicated but it is estimated that the extra value came to about 60%. A jackpot for a simple idea that could have been easily spotted by anyone.
Andy Krieger and the 1987 crash:
In 1987, Andy Krieger was only an employee of Banker’s Trust. At that time, the world experienced one of the largest stock exchange crashes in history. In reaction, the majority of traders sold American dollar in the tens of billions to the profit of other currencies of which the most popular was the New Zealand Dollar, also called the Kiwi. Andy Krieger, as a great trader that first anticipated the end of this rally therefore decided to sell more than 200 Million Kiwi. An intuition miracle as only a few days later, the Kiwi suffered a meltdown and Andy pocketed a more than reasonable sum. It should be noted that the amount sold by Krieger represented more than total of the money supply in circulation. It was therefore a risky bet but which ended in a huge payoff.
The three examples we have just cited seem to come from pure logic. Nevertheless, they have a common point which is their basis in solid economic foundations. Of course, it is almost impossible to reproduce these genius operations given the growing efficiency of the market. It is however always wise to look for such situations. You will also notice that it was while going against the market that these enormous profits were made. Attention however not to launch yourself without thinking in trades of this type because, on the one hand, they are extremely risky and also, they require an investment way beyond what an individual trader can normally afford.
Useful to know: While bitcoin traders have many tools they can use to evaluate the bitcoin investment, one of the most tried-and-true methodologies is what’s called technical analysis. Using this approach, traders can get a better sense of market sentiment and identify key trends, and, with this information, make better-informed predictions.