July 11, 2017

10 Biggest Trading Profits of All Time

Big trading profits are often remembered, with many being left in awe about how it was done. We have listed some of the biggest and most memorable trading profits of all times.

Jessie Livermore – 1929 Market Crash

Jessie Livermore is considered to be one of the greatest traders of all times, but oddly enough very few people know about him. Livermore used to frequent small, shady gambling establishments that would all anyone to bet on stock movements. It was here that he built up his bankroll, losing any money he would place on NYSE, blaming the markets mechanics for not being quick enough to keep up with his style of trading.

Eventually though, his style of gambling paid off, and he became incredibly wealthy after winning $100million by predicting the 1929 market crash. The staggering thing about his enormous win is that he traded on his own, using his own funds and his own system, without trading anyone else’s capital in conjunction. For those who are hoping that something like this will be just as easy in this day and age, a lot has changed. One of the main differences being that the markets were very thinly traded, making the moves very volatile.

George Soros – The Man Who Broke The Bank Of England

George Soros is one of the most successful traders in the world as is known as the man who broke the Bank Of England. In 1992, he predicted that Great Britain would devalue its currency, landing him $10billion pounds. This type of profit is very unusual for those trading on the Foreign Exchange due to the fact that currency values fluctuate by the minute, allowing for small profits.

George Soros became an overnight success in the early 90’s, by watching the British pound. It had shadowed the German mark leading up to the 1990’s, but he noticed that the countries were very different economically, and that although Germany was the stronger country, Britain wanted to keep the value of the pound above 2.7 marks. This left Britain with both high interest rates, and high inflation, but it was demanded that this fixed rate would be a condition of entering the European Exchange Rate Mechanism.

George Soros found himself wondering how long these fixed rates could fight the various market forces, and took short positions against the pound, before borrowing heavily, to make more bets on the drop in the pound. This gamble paid off though, and Soros eventually became a billionaire, earning the reputation of being one of the most successful traders ever.

James Chanos – Fall Of Enron

James Chanos, or Jim as he is more affectionately known is one of the best short sellers in the whole world, after famously predicted the demise of Enron, when others believed the company to be incredibly successful. He ended up profiting hugely from this. Other successful shorts for Chanos include Baldwin-United, Tyco International, Worldcom and KB Home, although it is Enron that he is most well known for.

Chanos first began investigating Enron in 1999, and by the end of 2000 after nearly two years of investigation, Chanos had analysed Enron’s activities in depth and knew that the company was lying about important details, and heading for disaster. He discovered discrepancies and a number of different red flags, before alerting the media to his findings. Eventually, when Enron’s stock hit $90, with a target price of $130-140, in November 2000, Chanos’ firm initiated a short position. Eventually, Enron filed for bankruptcy in December 2001, making Chanos a lot of money.

The reason that this stands out so much, and Jim Chanos is known know as one of the most successful short sellers, is that it was the biggest bankruptcy to date, making a huge impact at the time.

John Paulson – Real Estate Mess

John Paulson is another famous short seller who make his billions by correctly predicting the subprime mortgage crisis, which led to huge profits. Very few people say this coming, yet John Paulson was one of the very few, who not only saw it happening, but also got the timing just right.

Other financial giants were buying assets which were backed by subprime mortgages, while Paulson was using his hedge fund, Paulson and Co. to bet heavily against them; convincing banks to write credit-default swaps on mortgage backed assets, collecting as many as he could. Once he had done this, he simply sat back and waiting for the market to crash, before cashing in, landing him an impressive $3-4 billion.

This trade has led his hedge fund to be the third largest in the whole world, and in 2007, it stood at $15 billion.

Andrew Hall – Oil Trade

Andrew Hall turned to the oil trade to make his millions, and his decision paid off, and he found himself winning a $100million bonus. Hall took on a very risk bet in 2003, when oil was trading at $30 a barrel that it would reach $100 within five years. He bought many long-dated oil futures, that would mean a big loss if his prediction had been off. Because it seemed like such a farfetched bet at the time, he was offered his futures for very little money.

Unbelievably, despite the fact that this was such a risky bet, it paid off and Hall and Citigroup ended up making a huge amount of money, with Hall taking home in excess of $100million. Any good trader knows that it is incredibly difficult to predict the direction that an asset might go, but Hall, who is known for his risky trades was pinpoint a timeframe, as well as a price level of the move.

Other risky moves carried out by Andrew Hall include a time in 2009, when spot oils were cheap, but oil futures were so expensive so that he could not buy them. So, instead, he bought 100 million barrels of real oil and physically restored it himself.

John Templeton – Foray Into Japan

John Templeton made his millions back in the 1960’s, when he put over sixty per cent of his funds into Japanese Assets. He had previously correctly assessed the economic impact of the Second World War, which was the second most important economic event of the twentieth century.

John Templeton has long been a successful trader, and in 1939, when he put $100 each in 104 different US stocks that were trading below $1, and he managed to quadruple his profit in just four years. Perhaps, the biggest and best bet came just eight years before he died in the year 2000. It was just before the dot-com bubble popped, and he shorted a variety of internet stocks, making it the easiest, and best money that he had ever made.

He previously said that his trick was to sell all of his stock ahead of the post IPS six month lock up expiry, when a flood of CEO’s ad founders would be cashing out. He made more than $80million in just a few weeks.

Jim Rogers – Early Call On Commodities

Jim Rogers was ahead of his game, and in the 1990’s invested in commodities whilst they were cheap. He created the Rogers International Commodity Index, which has consistently returned 209 percent since 1998.

The excellent trader expects his commodities to continue to grow, as paper assets become more and more worthless and demand picks up worldwide. If correct, it would mean that his call would be elevated and he would become even more successful. Roger was one of the first people to invest in commodities in this way, making it even more impressive that Rogers called the bottom of the market that then went on to rally greatly for the next ten plus years.

Louis Bacon – Geopolitical Play

Louis Bacon placed a bold geopolitical bet that Saddam Hussein would invade Kuwait, which landed him an 86% return that year. He made several different bets, such as the US quickly defeating Iraq in the 90’s, and that the oil market would recover, all seeing him a big return in profits.

The reason that this move made him so successful and well known was that this type of trading was almost unheard of. He ventured outside of the field of finance, branching into the world of geopolitics. His feat was impressive because he anticipated the invasion even before top government officials did, despite them having better information and access than Louis Bacon did.

Stanley Druckenmiller – Two Bets On The mark

Stanley Druckenmiller bet on the German mark and made $1billion. This happened when George Soros was shorting the pound. This was all during the time before the Berlin Wall fell, and the reunification of East And West Germany seemed like a mammoth task, leading to the German Mark hitting an extreme level of depression.

Druckenmiller, who was employed by Soros’s Quantum fund, initially put several million into a bet that the mark would rally; however, later on, he actually increased this to $2billion. Because his prediction was correct, and the mark rallied, Druckenmiller made the fund $1billion.

Andy Krieger – The New Zealand Dollar

In the late 80’s, Andy Krieger shorted the New Zealand dollar, and made himself $300million, leading him to be one of the most successful traders of all times. Just after the Black Monday crash, investors panicked and rushed into trading other currencies, and not the US dollar. At this time, Krieger, who was a new, 32-year-old currency trader, felt that the New Zealand dollar was actually overvalued.

He used options, which were a new financial instrument, and took up a short position against the New Zealand dollar, which was worth millions of dollars. The currency yo-yoed between a three ot five loss, which netted Krieger’s employers about $300million, leading to Krieger getting a $3million bonus. From this, it is very clear to see why Krieger has become one of the most successful and leading traders of all times.

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Comments (2)

  1. Bablofil

    12 Jul 2017 - 3:59 am

    Thanks, great article.

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    02 Feb 2018 - 4:09 pm

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