Imagine taking a $12,000 inheritance from your grandmother and turning that into billions of dollars trading?
This is the story of Bill Lipschutz, and calling him a millionaire forex trader is an insult because as a matter of fact, he is not a millionaire forex trader but a billionaire forex trader.
Background Of Bill Lipschutz
Bill Lipschutz was studying in Cornell University to become an architect when his grandmother died. The kind hearted granny left him a sizeable chunk of inheritance…a portfolio of share worth about $12,000.
So what Bill did was to sell all the shares he got and used that money as his trading capital to start trading the stock market. And yes, he did that while still being a student in the University.
He completed his university, got his architectural degree. Whilst still in Cornell, he also studied a lot on business coursed and so also got an M.B.A.
Guess what happened to his Architect Degree? Well, it collected dust as he never used it.
It was the second business degree that enabled him to work with Salomon Brothers.
Here’s the funny thing: Bill Lipschutz said he never remember making a decision to be a trader. He said trading was a gradual process until it literally took over his life.
And he also never wanted to be an architect anyway? So why spend 5 years of your life studying something you don’t love? Well, Bill Lipschutz did!
What Happened To The $12,000 Trading Account?
Bill Lipschutz increased his $12,000 trading account to $250,000 within a 4-5 year period. He had an incredible string of success trading then something bad happened.
He made one trading decision and he blew up his trading account within a couple of days.
He was shattered…but he learnt from that mistake.
Bill Lipschutz Trading Highlights & Blunders
- Made $6 million dollars in 6 hours trading the NZDUSD in September 1985
- Made $20 million dollars trading the Japanese Yen in 1987
- In 1988, shorted D-Mark (official currency of Germany pre EUR days) by $3 billion and was caught on the wrong side with no liquidity during the New York Trading Session when the dollar started increasing against the D-Mark. He was staring at a paper loss of $30 million dollars in just under 8 minutes and at one point during the time of that trade, the paper loss went up as far as $90 million. He managed to close that trade with a total of $18 million loss when liquidity was available during the Tokyo (Asian Trading Session).
Bill Lipschutz Net Worth
Bill Lipschutz net worth is unknown but he was considered one of the top 5 of all forex traders and in 1985, Lipschutz was making $300 million dollars a year from Salomon Brothers.
Bill Lipschutz Trading Strategy
The exact details of Lipscutz trading system are not know but here’s some of the things he said on Market Wizards, Updated: Interviews With Top Traders:
I don’t trade on dreams or rumors. I’m a fundamental trader. I try to assemble facts and decide what kind of scenario I think will unfold”
It is well acknowledged that the most profitable market environment for FX [foreign exchange] trading is a trend – in particular a trend that unfolds over a medium-to long-term time horizon.
A key to profiting from a trend is the ability to stay in the trade and not be shaken out during periods of price consolidation or correction.
Bill Lipschutz Trading Quotes
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 per cent 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.
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