I may have learned more about the foreign-exchange markets studying Eastern religion than I did at Wharton Business School, but one thing is for sure, having the right mentor was key to my success in trading.
At Wharton, the foreign-exchange market was dealt with in a cursory, rudimentary fashion in International Finance. It was hardly mentioned in the course on speculative markets, since Spec Markets focused primarily on whether one could speculate in the equity markets and make money over time. In fact, we studied efficient market hypotheses and were taught that we could not consistently make money in freely traded markets through speculation. No professor said anything about making money in foreign exchange.
After going through the training program at Salomon Brothers, I started out in the foreign-exchange area. At that point, I had developed some skills in the area of computer programming and systems design, with a specialization in options theory, and I put the background to work in structuring my trading strategies. I had nothing to go on except my knowledge of options theory and an intuitive feel for the markets.
But what truly set me apart was my manager, Gil. He was a particularly skillful trader in bonds and fixed income instruments. Foreign exchange was a new game for him, but he had terrific instincts about markets and people. For a young trader such as myself, he was the perfect mentor. He gave me plenty of room to grow and express myself in creative ways, and he made sure I had the finest analytical support systems available. He also taught me about the interrelationships of markets and encouraged me to look at the bond and commodity markets as a way of understanding and forecasting currency flows.
I started following the trading in crude oil, soybeans, and other commodities even while I was exclusively trading currencies. For instance, at one point Gil noted that speculators had started buying soybeans, which he said was an indication that people were worried about inflation. But instead of investing in soybeans, Gil began buying the Swiss franc. When I asked him about it, he told me, “Whenever there’s inflation, people move toward traditional safe havens like the Swiss franc. It makes sense that the Swiss franc is going to go up.”
Gil's guidance and mentorship was crucial in helping me navigate the foreign exchange market. His instincts and experience helped me to understand the interrelationships of different markets and how to use them to my advantage. Without him, I may have struggled to make sense of the complex and constantly changing world of trading. I am grateful to have had such a skilled and supportive mentor and I believe that anyone looking to succeed in the trading world should also strive to find one. A good mentor can make all the difference in helping you navigate the markets and make profitable trades.