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George Soros Forex

Published by Usman Ahmed, MBA (Researcher)

Reviewed by Bowen Khong, ACCA

George Soros is a billionaire investor and Philanthropist. He was born in Hungary, and he also has American citizenship. His present net worth is estimated at $8.6billion. He was schooled in London, where he had his Bachelors, Masters, and eventually a Ph.D. 

In his early days as a businessman, he worked at merchant banks in the United Kingdom and the United States before starting his first hedge fund named Double Eagle in 1969, renamed – Quantum Fund. After making some respectable profits, he started his second hedge fund named Soros Fund Management. Quantum Fund had $12 million in assets when it was founded and had grown to $25 billion as of 2011.

George Soros Forex Trading Rules

Soros is inarguably one of the notable forex traders of this age. His exploits in the forex market have been so big that they have not gone unnoticed. It is also worthy to study the strategies such an intelligent forex trader uses.

This section will describe 10 of George Soros’s trading philosophies that guide how he approaches the market.

  1. He believes a forex trader won’t always be correct; you have to learn from your mistakes. 
  2. He is not too strict with his rules and doesn’t marry them. He improved his trading rules by correcting the false notions and making them better. 
  3. George Soros understands that a trader doesn’t have to have more wins than losses to be profitable. As long as the money you make when you are right is more than the amount you lose when you are wrong, you will be profitable.
  4. The market plays on the psychology of investors; mastering trading psychology (greed, fear) is very important to the long-term success of traders.
  5. You will always have times your analysis won’t go as expected in the market; a trader should always accept this and learn from the mistakes. No one has perfect scores in the trading market, and there is no shame in having losses; you have to handle them well.
  6. When it looks like a trend has gone too far, accept it and be patient, wait for when it is about to reverse.
  7. Trading is boring. It is a very dull game, even when you are making money.
  8. No one is 100% sure of what might happen in the market at any time. It is full of uncertainties, and the tricky thing is that you have to predict the next market move to make money. There is no certainty in any trade taken.
  9. Traders enter into trends at the beginning of the movement and follow the market move; they also follow reversals when they happen. A trader should not force trades in the market but follow the market.
  10. The market is unpredictable; no one can predict what is going on in the market. Many times, the market humbles traders that believe they can predict all movements. correctly

George’s Biggest Forex Trades

Breaking the Bank of England

Soro was named “the man who broke the Bank of England”, after a transaction performed on 16th of September 1992. The day was considered a black Friday because of a series of transactions he made with some other traders that caused a bad devaluation of the British Pounds, that Britain had to take the currency out of the European Exchange Rate Mechanism (ERM). This trade affected the bank of England so much that Soros earned $1billion in just one day. When trying to explain his strategy, he said in his words, “…you borrow Sterling, and you sell the Sterling that you’ve borrowed. And then you buy back the Sterling when the loan expires.” He and his group of traders took advantage of the weakness of the Pounds Sterling at that time. [1]

He earned $790 million at a time.

Another big trade he made was in 1977 when he speculated the devaluation of the Thai baht, and he made $790 million off the exchange. He had predicted that the Baht would go down at that time, so he bought USD/THB (going short on Baht). This move affected not just Thailand, but many other Asian countries as it caused a big financial crisis in Asia.

$1.4 billion from the fall of the Japanese Yen

Yen had to devalue in 2012 after the Tsunami that damaged the Japanese economy in 2011. The recovery was slow, and the devaluation was necessary to boost the economy. That was a good signal for investors to short the JPY. Many investors bought the USDJPY with the belief that the dollar would rise against the Yen. George Soros also jumped into this move early as he allocated 10% of his $24billion company worth to USD/JPY. They gained close to $1.4m in the trade.

Conclusion

George Soros takes advantage of the economic vulnerabilities of nations. When he envisages a critical situation that might trigger a big market move, he invests big and enters early to make the most of it. 

The financial state of a currency determines the strength of such currency against another. When an economy is getting troubled, Soros starts looking for opportunities to make money off that through their forex market. 

These moves and many others have named him one of the biggest and most successful forex traders of all time.

Usman Ahmed, MBA (Researcher)
Usman Ahmed, MBA (Researcher)
Usman Ahmed is a currency trader and financial market analyst with more than 7 years of active trading experience. Besides holding a Masters degree in Business Administration, he has worked for some of the most renewed companies in the forex industry including FXCM, IQOption, MetaQuotes, Alpari, FXStreet, DailyFX and several others. Usman possesses strong technical analytical skills and is famous for his very own, informative and entertaining, writing style. He believes in naked chart trading analysis that is commonly known as price action trading. He follows global financial news and macro-economic events very closely.
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