760x200 learn fx 2

Soros became known as "the man who broke the Bank of England." The trade has become one of the most famous of all time and here we will look at the trade in more detail and the rise of the Hedge funds and there ability to move markets. 

Soros would not actually claim to being the person who broke the Bank of England, as 10 billion on its own wouldn't have done it and there were many other traders who took bets short the Pound such as Paul Tudor Jones and Bruce Kovner and many others and he was quoted as saying:

Although I believe the man who caused the bankruptcy of the Bank of England was not really [me]. Market was the one who did it.“ (George Soros)

The Trade Against the BOE

Soros looked at the big picture and correctly concluded that the Bank of England would not be able to support the Pound and that it would fall against both the Deutsche mark and also the French franc On September 16, 1992 or "Black Wednesday" (as it's commonly known as) saw the British government leave the ERM, and the pound was devalued by 20%. Soros was right in his view and made his the Quantum fund a billion dollars in profit in the process.

World Fame from a Single Trade

Many people hate him for what happened and many of course admire him but as he himself says – he didn't do it on his own, the market did it but what it did show was the power of speculators to cause havoc in financial markets.

"Our total position by Black Wednesday had to be worth almost $10 billion. We planned to sell more than that. In fact, when Norman Lamont said just before the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell." (Geroge Soros Times Newspaper)

The Emergence of the Power of Large Funds

George Soros strength was he saw the big picture and while he is most famous for the trade in this article he has of course done many big trades but what I find interesting was in the 1990s money became more of a speculative commodity than ever and with the liberalisation of trade and the opening up of markets big funds have more power in terms of moving markets than at any time in history and George Soros and the Quantum fund showed the power speculators had in terms of moving markets.

George Soros Trading Strategy

We have covered George Soros and his trading strategy in another article in this site in more detail and while he made money speculating his views and trades are nothing personal just a statement of the facts as he sees them and his humanitarian side is there for all to see in his generosity to charity and the books he has written which give his views on trading markets, as well as his views on life.

Soros not only showed what a great investor he was with the trade against the BOE, he also bought to the attention of the general public the power of speculative funds in terms of moving markets. 

Daily FX ResearchDaily FX R