3 Biggest Forex Trades of George Soros

7/3/2021 Trading Strategies - 3 Biggest (Step-By-Step) Forex Trades of George Soros | Forex illustrated
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Soros
Trading Strategies – 3 Biggest Forex

Trades of George Soros
Posted on July 16, 2020 by Fxi in Forex Strategies & Tips, Top stories
Uncover the step-by-step strategies that George

Soros used to earn massive amounts of money AND
shutter whole countries (accidentally?) as collateral
damage.
If you want to learn more in-depth strategies of how to

spot forex trading opportunities then have a look
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Another great resource is forex trading pdf – where 4

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1. Soros breaks the Bank of

England and earns $1 billion in
1 day
September 16, 1992, went down in history as “Black
Wednesday”, the most notorious forex market event
where Soros earned the nickname “the man who broke
the Bank of England” because of the transactions he
performed together with other traders against the
Sterling (Nickname of the British Pound. To uncover the
nicknames of all the major currencies you can read The
Secret Handshake of Traders)
They didn’t break it directly, but the devaluation of the

pound was so bad that Britain had to take it out of the
European Exchange Rate Mechanism (ERM).
Fig.1. How Soros Broke the Bank of England in 1992.
Even though Britain was in a recession in 1990, the

pound (also known as sterling) joined the ERM that year.
It fixed the pound’s rate to the Deutsche mark in order to
make the investments between Britain and Europe more
predictable and stable. But as the political and financial
situation in Germany changed during its unification,
many ERM currencies were under big pressure to keep
their currencies within the agreed limits.
Britain had the most problems: its inflation rate was very
high and the USD rate (many British exporters were
being paid in USD) was also falling. As it became clear
that the pound was not able to artificially withstand the
natural market forces, more and more speculators
began circling around and making plans on how to profit
from this situation.
They waited until the financial situation got as bad as it

could naturally get, and then created extra pressure on

the pound by selling it in huge amounts. The most
aggressive of them was Soros who performed this

transaction every 5 minutes, profiting each time as the
GBP fell by the minute.
“The money that I made

on this particular
transaction would be
estimated at about $1
Billion dollars. We very
simply used the forward
market – you borrow
sterling and you sell the
sterling that you’ve
borrowed. And then you
buy back the sterling
when the loan expires.”
– G. Soros.
Let’s look at a simplified example to understand

this trading strategy:
Soros borrows 1 million GBP, sells it at the current rate

for 2 million USD (GBP/USD = 2.00) and buys it back
when the GBP/USD = 1.50 for 1.5 million USD, thus
keeping the difference of 0.5 million USD.
In order to sustain the fixed rate, the Bank of England

was buying 2 billion GBP an hour, which was an
unprecedented amount. The policies of the ERM

demanded that the countries with the strongest

currencies have to sell their currencies and buy the
weakest to help maintain the equilibrium. In this case,
the Bank of Germany had to sell Deutsche marks and
buy pounds.
However, they didn’t come to Britain’s rescue because

apparently, Germany had an interest in seeing the GBP
devalued. All of Britain’s efforts to pump in money and
increase the already high interest rates proved futile. In
the late afternoon of September 16, as the traders
understood that the Bank of England had insufficient
amounts of foreign currencies to buy in all the pounds
that were sold, they pushed even more which resulted in
a collapse. At 19:40, the British prime minister confirmed
defeat and declared that Britain is leaving the ERM.
Watch the video to see more details about the Black

Wednesday:
Black Wednesday (1997)
Have a look at how the British Pound is doing

against the US dollar today. Maybe you can spot a
nice trend and make a profitable trade!
2. Soros earns $790

million, crashes the
Thai baht and

triggers the Asian

crisis
The second most notorious trade of Soros came in 1997
when he saw a possibility that the Thai baht could go
down. So he went short on the baht (by going long on
USD/THB) using forward contracts.
His actions were often considered a triggering factor,

which resulted in the big Asian financial crisis that
affected not only Thailand but also South Korea,
Indonesia, Malaysia, Philippines, Hong Kong, and
others.
Fig.2. How Soros gained $790 Million and destabilized Thailand’s and Asian
economies in 1997 – 1998.
This is how it happened: 
1. Soros goes short on the Thai baht.
2. Thailand spends almost $7 billion to protect the baht

against speculations.
3. Soros sells all his baht resources and publicly

warns people about its possible fall and ensuing crisis.
4. On July 2, Thailand is forced to give up the fixed rate

of the baht and it starts to float freely. Thailand asks for
help from the International Monetary Fund (IMF).
5. Thailand takes on hard austerity measures to secure

the loan from the IMF.
6. Baht falls from 1 USD for 25 baht to 56 baht >> Soros

gains more than $790 million!
3. Soros gains $1.4 billion from

the falling yen
Japan’s economy was seriously damaged after the
devastating tsunami in 2011 and its economic recovery
had been slow. Since then, traders have been waiting
for the yen to weaken. This started to happen at the end
of 2012 when Shinzo Abe (then a candidate for the
Prime Minister post) publicly spoke about his plans to
weaken the yen in order to boost the economy.
Taking into consideration his high approval rating, this

was a good signal for the investors to open big

USD/JPY positions, betting that the value of the dollar

would rise against the yen.
Fig.3. How Soros used the economic situation in Japan to earn $1.4 Billion in 2013
The first one to jump in was Soros who is legendary for

his skills of shorting different currencies with high
leverages and worldwide consequences. He forecasted
the upcoming trend and the Soros Fund Management
allocated 10% of its $24 billion to USD/JPY in mid-
November 2012. Since then, they have gained $1.2 –
$1.4 billion (according to sources close to the Fund) in
this deal and the yen is still going down.
Other big players who opened similar positions include

Daniel Loeb, David Einhorn, Caxton Associates, Tudor
Investments, and Moore Capital. These huge bets
helped increase the momentum of the yen’s slide. This
was not only beneficial for the traders who went short on
the yen, but also for Shinzo Abe who knew that a
weaker yen could make Japan’s export more

competitive.
This, in turn, was heavily criticized by EU countries who

understood that such intervention would lower their
export potential because Japanese production would
cost less and less. Banks and hedge funds soon started
telling their clients to go on this bet as well. The dollar
increased, even more, when Shinzo Abe was elected as
the Prime Minister on December 26, 2012.
After this, even the Bank of America jumped in to make

profits from this trend. Luckily for Japan, these moves of
Soros and other traders didn’t threaten its currency as it
did when Soros went short on GPB in 1992 and on Thai
baht in 1997, damaging both currencies and creating
financial collapses in both countries. The reason for this
is that locals own the biggest part of Japan’s resources
and debts.
What can we learn from these super

deals?
The main strategy of Soros and other traders is to spot
the upcoming economical vulnerability of a country and
then go short on its currency right before the fall
happens. The highest potential for currency fluctuations
—and consequently, gains— is when a currency has a
fixed rate tied to another currency, as in the case of the
pound and the baht.
In these cases, the weak countries were very vulnerable

to speculations as they tried to artificially sustain the
fixed rate by buying in their own currency. This artificial
currency balance is prone to dramatic collapse when it
can no longer withstand natural market forces. In the
case of the Japanese yen, the signal to go short was
when the Japanese government said it would depreciate
the currency in order to boost its economy and attract
investors.
As you can see from these examples, economic crises

often offer the best opportunities for currency traders. Of
course, it looks much easier when observed in
retrospect, but these are patterns that can be used by
everyday traders as well.
Tagged forex basics forex strategies george soros learn forex trading
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3 thoughts on “Trading Strategies – 3 Biggest Forex

Trades of George Soros”
Follow The Trend September 23, 2013 at 7:50 am

Great article! What I found interesting about his breaking the pound
sterling…was that a long term trend following system with a 10 ATR was
long, didn’t get stopped out and then the pound was at highs later and it
was a profitable trade, that’s robust
Fxi October 18, 2013 at 11:13 pm

Thanks for the appreciation! The strategies of George Soros
are quite robust indeed. Just like your response 🙂
Post author
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7/3/2021 Trading Strategies - 3 Biggest (Step-By-Step) Forex Trades of George Soros | Forex illustrated

Partnering with Forex24

Trading Strategies – 3 Biggest Forex

Uncover the step-by-step strategies that George

If you want to learn more in-depth strategies of how to

at Forex Hero – the trading game, it’s the #1 learning

Another great resource is forex trading pdf – where 4

1. Soros breaks the Bank of

They didn’t break it directly, but the devaluation of the

Fig.1. How Soros Broke the Bank of England in 1992.

Even though Britain was in a recession in 1990, the

They waited until the financial situation got as bad as it

aggressive of them was Soros who performed this

“The money that I made

Let’s look at a simplified example to understand

Soros borrows 1 million GBP, sells it at the current rate

In order to sustain the fixed rate, the Bank of England

demanded that the countries with the strongest

However, they didn’t come to Britain’s rescue because

Watch the video to see more details about the Black

Black Wednesday (1997)

Have a look at how the British Pound is doing

2. Soros earns $790

triggers the Asian

His actions were often considered a triggering factor,

This is how it happened: 

1. Soros goes short on the Thai baht.

2. Thailand spends almost $7 billion to protect the baht

3. Soros sells all his baht resources and publicly

4. On July 2, Thailand is forced to give up the fixed rate

5. Thailand takes on hard austerity measures to secure

6. Baht falls from 1 USD for 25 baht to 56 baht >> Soros

3. Soros gains $1.4 billion from

Taking into consideration his high approval rating, this

USD/JPY positions, betting that the value of the dollar

The first one to jump in was Soros who is legendary for

Other big players who opened similar positions include

weaker yen could make Japan’s export more

This, in turn, was heavily criticized by EU countries who

After this, even the Bank of America jumped in to make

What can we learn from these super

In these cases, the weak countries were very vulnerable

As you can see from these examples, economic crises

3 thoughts on “Trading Strategies – 3 Biggest Forex

Follow The Trend September 23, 2013 at 7:50 am

Fxi October 18, 2013 at 11:13 pm

Pingback: 11 Counter Intuitive Tips How to seduce girls (Part I)

Comments are closed.

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