Andy Krieger’s Most Infamous Forex Trades
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Andrew J. Krieger, or Andy as he is popularly referred to, is one of the most aggressive forex traders the world has seen.
His track record spans over 30 years in the trade and is famous for his 1987 Black Monday strategic move that broke the New Zealand Central Bank, where he made over $300 million in one day for his employer – Bankers Trust.
Andy Krieger started his trading career when he joined the Salomon Brothers. He worked for a short while and later made his career-making move in 1986 when he joined Bankers Trust.
Krieger, in 1988 after leaving Bankers Trust, joined the Soros Fund Management owned by George Soros. He worked there for a short period and founded Northbridge Capital Management Inc. and Krieger & Associates Ltd.
While opinions differ depending on who you ask, these are the most well-known forex traders:
- George Soros – Gained international fame for “Breaking the Bank of England” in 1992 after going short on the British Pound Sterling.
- Stanley Druckenmiller – He worked with Soros in the famous Bank of England trade that shot him to stardom. His feature in the best-selling book, The New Market Wizards, also increased his fame.
- Andrew Krieger – Famous during the October 19th, 1987 crash also known as Black Monday. He went short against the New Zealand currency and made over $300 million for Bankers Trust.
- Bill Lipschutz – He started trading while in University and transformed a $12,000 account into $250,00 but lost it because of a bad trade decision. Most of his fame came from working for the Salomon Brothers, where he earned the company $300 million per year.
- Bruce Kovner – He made his name after founding Caxton Alternative Management in 1982. He later transformed it into one of the most successful hedge funds worldwide. It has over $14 billion in assets.
Going short means you believe the price of a currency will drop. To go short in the forex market, you only need to place a sell order. Let’s use a live example:
If the GBP/USD rate is 1.3021. This means 1 pound is equivalent to $1.3021. if you go short on the pound, you’ll sell it at this price. After the value goes down to 1.3000 and you buy the pair, you’ll have made 21 pips.
For a standard lot size (100,000 units), the value of 1 pip is 0.0001 / 1.3021 x 100,000 = $7.68. For 21 pips, that means you made $7.68 x 21 = $161.28
Andy Krieger became a famous trader after the famous 1987 Black Monday. On this day, the stock market fell like the rain from the sky and the dollar was losing value fast. Traders hedged their funds in other currencies as a stop-gap measure until the market recovered.
The Kiwi was one such currency that traders used and Krieger believed it couldn’t handle the pressure and that it would drop in value. With huge funds backing from Bankers, he went short on the Kiwi and sure enough, it lost value – up to 10%.
His actions saw New Zealand Central Bank go into a tailspin. In the end, Krieger made over $300 million for Bankers Trust from that trade alone.
The most volatile currency pairs are:
- AUD/JPY (Australian Dollar/Japanese Yen)
- NZD/JPY (New Zealand Dollar/Japanese Yen)
- AUD/USD (Australian Dollar/US Dollar)
- CAD/JPY (Canadian Dollar/Japanese Yen)
- AUD/GBP (Australian Dollar/Pound Sterling)
If you're a forex trader, you may want to consider current volatility levels as well as prospective changes in volatility before stepping into currency pairs.
Again, the list is relative depending on certain factors but according to articles by Finance Brokerage and Medium, these are the richest forex traders:
- Warren Buffet - Estimated net worth: $84.2 billion (2019)
- George Soros – Estimated net worth: $8 billion (2019)
- Bill Lipschutz – Estimated net worth: Unknown
- Stanley Druckenmiller – Estimated net worth: $4.4 billion
- Bruce Kovner – Estimated net worth: $5.2 billion (2019)
- Paul Tudor Jones – Estimated net worth: $4.5 billion
- Andrew Krieger – Estimated net worth: Unknown
- Michael Marcus – Estimated net worth: Unknown
Currency trading or forex trading works in different ways. However, it all comes down to one concept: when you buy one currency, you sell another. There’s an agreed price for each currency and that is how companies, central banks, and individuals convert one currency to another.
With tons of foreign exchange happening worldwide, demand and supply forces come into play, thereby affecting certain currency prices. This makes the forex market extremely volatile and that is what attracts traders.
According to a recent Medium article, Andy Krieger’s net worth is still a mystery. Nevertheless, he is one of the richest forex traders in the world.
In this book, Krieger discusses the inside dealings of the massive foreign-exchange market, where trading volumes exceed $700 billion. He talks about how traders make bank for securities firms, multi-national corporations, money-center banks, and private investors by trading currency pairs.
Krieger also delves into market forces that shift the scales in the 24/7 market and why you should keep an eye out for these forces.