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Jul 21
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George Soros is known as “the Man Who Broke the Bank of England” after he made a reported $1 billion during the 1992 UK currency crisis. He bet against the British pound and won big.
I came across a quote by George Soros, that seems to give an easy answer as to how the famous speculator makes money in a turbulent world.
The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.
George Soros
It is clear what George Soros does, He evaluates multiple scenarios and takes position in each scenario. As the market unfolds he lets profits run on the correct scenario and cuts losses on wrong scenarios. At a single time he might be long on a position but still take a short position on the same.
To play this scenario game you need to use risk management tools such as options, futures and short sales. For this kind of trading to be successful an investor needs to have sufficient capital to buy those tools.