The biggest trades in history, and the two that were forex

Ask for the biggest forex trades in history and you get a list of famous names. Read their stories and only two of the trades turn out to be single bets on a currency. Here are the eleven traders we have profiled, what each one actually traded, and the habit that separates the fortunes that lasted from the ones that did not.

Which ones were forex trades?

The week after Black Monday in 1987, Andrew Krieger of Bankers Trust built a short on the New Zealand dollar reportedly larger than the country's money supply. He used options, with leverage estimated at 400:1. The kiwi fell around 5% within hours, and the bank made about $300 million.

Five years later came the most famous currency trade ever made. Before Black Wednesday, 16 September 1992, George Soros's Quantum Fund shorted roughly $10 billion of sterling, and it reportedly booked more than $1 billion when the pound left Europe's Exchange Rate Mechanism (ERM). Stanley Druckenmiller built the position; Soros's contribution was to insist it was too small.

Some currency shocks have no famous winner at all. On 15 January 2015 the Swiss National Bank dropped its floor and EUR/CHF fell 13.8% in a day on daily figures, and much further intraday: the Frankenshock. Several retail brokers ended that day with clients owing more than their account balance.

Which were the biggest losses?

Neither of the two on our list was forex. Nick Leeson hid his losing bets on Japan's Nikkei index until the losses reached roughly £827 million, and in 1995 they sank Barings, a bank founded in 1762.

In 2008 Jérôme Kerviel's concealed positions at Société Générale reached €49.9 billion, and unwinding them cost the bank €4.9 billion. They were futures on European stock indices.

One difference stands out: Kerviel's hidden book had been winning the year before. What the two share is that nobody could see the positions, so nobody could size them.

Which famous trades were not forex?

Jesse Livermore made about $100 million shorting the 1929 stock market crash, then lost all of it. Paul Tudor Jones's fund, positioned for a stock market crash, reportedly returned 62% in October 1987, the month of the Dow Jones's worst day. Nicolas Darvas turned about $25,000 into roughly $2.25 million in stocks while touring the world as a dancer.

Which were careers rather than trades?

Three of the eleven are not remembered for one trade. Bill Lipschutz ran foreign exchange at Salomon Brothers and, at his peak, reportedly earned the firm over $300 million a year. Richard Dennis's Turtles followed a set of rules across many futures markets and reportedly earned more than $100 million in about four years.

Jim Simons's Medallion Fund returned roughly 66% a year before fees from 1988 to 2018, and about 39% after them.

All eleven at a glance

This is not a ranking. The figures are widely reported accounts in different currencies and decades, and they do not compare cleanly.

Where does the difference lie?

Not in the market, and not in the call. Livermore was right about 1929 and still went bankrupt within a few years. Leeson was not ruined by one bad trade but by refusing to close a losing one.

What separates them is how much a wrong call could cost. Krieger's options capped what he could lose, Jones kept each attempt small enough to try again, and for Druckenmiller, being wrong stayed cheap. That is the part a retail account can copy, and it is covered in our guide to risk per trade, our guide to position sizing and our explainer on leverage.

None of these trades can be repeated. The arithmetic of limiting the loss can.

Figures are widely reported accounts, taken from our profile of each trader and our post on the Frankenshock. Kerviel's instruments are from the French finance ministry's report of February 2008.