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What would happen if an extremely skilled forex trader cornered the worlds currency market, and managed to…?

I want to know in your opinion what you think would happen if one day an extremely skilled, talented and diciplined forex trader took £100, and doubled it every day for a year which I know isn’t even possible, but if they managed to, and managed to corner and accumulate the currency markets worldwide, what would the govenments and people of the world do about it if someone did this?

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3 Responses to “What would happen if an extremely skilled forex trader cornered the worlds currency market, and managed to…?”

  1. nicky b said :

    Try to figure out how he did it. Then everybody else would do it and he would lose all his money, and write a book about it and make a million or so. It would be titled How I cornered the worlds currency market.

  2. happy-scally said :

    Each government would be very nervous, in case he suddenly placed an order to sell their currency. This would cause their exchange rate to collapse, and make it impossible to buy goods from abroad.

    I expect every government would be very nice to someone who had cornered the market in their currency. At least until they had either put in place exchange controls, or come up with an agreement with the governments of the other major economies to lock this individual out of the markets.

  3. SimonC said :

    Firstly, there isn’t anywhere near enough money on the planet for someone to double their money every day. Do the maths and you’ll see that you end up with well over 10^100 pounds – which is billions of pounds for every proton in the universe!!

    But even the greatest traders do not come anywhere near doubling their money in a day. They make profits by trading vast sums on tiny margins. A 1% profit in a day is excellent if you were trading with £10 million.

    And in any case there is a limited supply of currency, which is small compared to the reserves held by governments (of their own and other major world currencies). If one trader (or bank) bought up all the available Pounds Sterling, the impact would not be catastrophic. And to do so would mean they probably had to spend all their reserves of other currencies, which is a highly risky strategy.

    The national government that issues a currency has a number of defence mechanisms to avoid any possibility of this kind of thing. EG they could set interest rates to zero, meaning the trader holding the currency would not be earning anything on his holdings. So he would have to sell, which would lower the price, so he might end up with a loss. Or a government could take even more extreme measures such as devaluing the currency.


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