George Soros in 1992, a 1 billion euro net profit. Find out
more about his strategy and about what he is trading today.
Remember the Black Wednesday ? On 2 September 1992 George
Soros in history as "the man who cracked the Bank of England" known.
selling On that day, George Soros more than $ 10 billion pounds sterling short,
with a net profit of around 1 billion euros .
We want to delve deeper into Soros strategy, philosophy and
dipping his current steps.
Strategy
Simple economics: Soros trades with limits that are derived
from rules. This, and the understanding of the dynamics between economic giants
on Europe, he puts the pieces together. Under the provisions of interest rate
fluctuations and government intervention Soros discovered a developing bubble.
He borrowed pounds, it sold for De suction marks, and
flooded the currency market with an excess supply of pounds. This led to a P
-fund depreciation.
1 Playing by the rules
2 Discover a bubble forming
How did Soros know?
In September 1992, the United Kingdom was torn between an
increase in interest rates at the level of the European Exchange Rate Mechanism
(ERM) or to let the currency flexible. Soros saw the devaluation of the pound
ahead because: the UK, the pound would have to deduct from eERM, as the Bank of
England (BOE) would not have been able to keep the GBP exchange rate over the
agreed limit. Therefore, the pound would have to lose value.
Soros was known that the German Bundesbank, Germany's
Federale bank, a depreciation of the S terling and the Italian lira preferred.
Second, the British would be high interest rates disastrous for the UK asset prices.
So he began Septemb 1992 so that he, S to borrow terling and convert them - in
a mixture of F French francs and German marks.
On 16 S eptember 1992, the British P was forced to fund from
the ERM.
Philosophy
George Soros takes advantage of the power of the forecast ,
from a slightly different angle. Soros is a pattern finder: find error
patterns. He applies his knowledge in relation to a social theory- reflexivity
-over its financial strategies. This theory is based on the principle of the
Thomas theorem: "situations that someone defined as true for one will be
true." In other words, essentially, our decisions are based on the
forecasts that we make ourselves, so the forecasts are fact.
Similarly, in the arena of economic and financial markets,
market forecasts of individuals can lead to decisions and actions that are
based on the predictions. Here George Soros comes into play: It is an evolving
financial bubble that predicts the actions of the people, and then he does
exactly the opposite .
We all search for a pattern to perform something, yet the
discovery of the financial strategy of the minority leads to the highest
returns.
Soros in 2013
Soros last trade was a bet against the Japanese Y s. He has
made nearly $ 1 billion since last year with these trades, while the yen
shortet. On 4 April , 2013, after Japan announced financial easing measures to
achieve a 2% inflation target, the yen fell more than 3 percent against the
dollar.
Soros said on CNBC: " If the yen starts to drop what he
has done, and people in Japan realize that is the expected go on and want to
get their money abroad, then the case could come as an avalanche. "
Learn Forex - USD / JPY weekly trend
Created Using FXCM's Marketscope 2.0 charts
Today you can benefit from the weaker Japanese yen just as
the currency trade giant George Soros! While the couple are heading with
Japanese yen on higher highs, traders can use a breakout strategy.
They have no strategy? FXCM offers a number of automated breakout
strategies that implement the Buy, Sell, and logical exits in compliance with
the current market conditions.
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