People get involved in the foreign currency exchange (Forex) markets to generate quick, high returns on their investments (read: make a lot of money, fast). They have that opportunity because the Forex markets are open 24-hours a day, five days a week (from 6PM Sunday to 4PM Friday U.S. EST).
In Forex, we trade the money of countries, simultaneously buying one country’s currency while selling another’s. When Forex trading was opened to the public, the only real players were the “Big Boys” who could drop $10-$50 million without blinking. By the end of the 1990s, Forex had evolved form its original business-to-business format (between banks and financial institutions) to include small businesses and individual speculators. While individual speculators only comprise a small percentage of nearly $4 million in Forex trading volume daily, the number of speculators continues to grow dramatically.
Hang Ten, but Use the Ankle Strap
Since more of us can get in the water, it makes sense that more of us can learn to surf those exciting, ever changing waves. The market has proven that some of the best strategies come from joining forces with other traders, such as pooling your investment dollars with other investors into managed Forex funds or Forex hedge funds. In simple terms, people put their money together in “pools” to under the guidance of a Forex trading expert to improve their chances of success either because they do not have the Forex knowledge or time themselves to trade currencies.
Forex hedge funds are created to generate some of the most aggressive trading strategies. These managed portfolios are established to catch the big waves or get the biggest bang for our bucks. Most Forex managed funds are led by a fund manager. The Forex fund managers act as the lead traders for all of the investors in a group.
A recent Greenwich Associates survey suggested that hedge funds accounted for around 20% of the total amount of Forex trading around the globe. That means they’ve become the primary tide behind the enormous swell of the currency trading business. Two decades ago, there were about one hundred (100) funds trading $40 billion and now there are more than ten thousand (10,000) separate funds with assets totaling just over $1.4 trillion.
Riding the Wave
For the most part, participation in a hedge fund opportunity is “by invitation only.” Networking with people involved in the Forex market is the best way to get an opportunity to ride the Forex hedge fund wave. We have to be on the beach with our boards waxed, to be noticed by the real surfer dudes. A few thoughts before we paddle out:
- First, fill the sand bucket. Gather a stake for investment with a minimum of $10,000.
- Take lessons. Visiting online brokers to educate ourselves is smart. The FXCM.com, eToro and ACM Forex trading sites are a few places to do research.
- Prepare for a “Wipeout!” Sometimes we take a loss.
- Ride the Party Wave to the Peak. At the crest of the wave, we celebrate!