There are different kinds of forex funds that you can invest in. You can get a forex managed fund which is a capital account that you setup for a money manager to trade on your behalf. You can also invest in forex hedge funds, if you have the net worth that is.
Why Invest In A Forex Fund
The currency market is the single largest financial market on the planet. The estimated average trading volume is pro-ported to be at around $3.2 trillion a day. To give you an idea of how large that is, if you look at the New York Stock Exchange, they only do $153 billion of volume a day.
The enormity of this market compels any investor to want to get involved. It’s an extremely large pie and many players want a piece of it. But it can also be a complex market to understand and master and that is where forex funds come in.
The main reason people choose to invest in funds is so they don’t have to trade on their own. Trading is a very complicated and difficult exercise. In fact, in the forex market very few traders actual learn to master this art. Investing in a fund is a great alternative to having to trade yourself.
For stocks you can invest in a company and leave it there long term without a whole lot of oversight. You can’t do that in this market. You have to stay on top of any open trading positions you have or you can lose a lot of money. In addition, the forex market trades 24 hours a day. That means you can’t leave you money out in the open overnight, unless you plan on staying up to monitor it.
Currency trading is really mostly day trading and there are few alternatives to that. There really aren’t any forex trading strategies that exclude becoming a day trader, except for investing in funds.
For small and large investors a like, the currency market is too big of an opportunity to pass up. But at the same time, most people don’t have the time to spend on learning how to trade it properly. Forex funds give investors the option and opportunity to get in on this massive money making game without becoming full time day traders.
Forex Managed Funds
These are also called forex managed accounts in which you place money with a broker and they trade your trading capital for you. This is a great alternative to retail investors who don’t want to or have the time to spend to learn forex trading techniques. You basically put money on deposit in a managed account and an experienced money manager trades your money on your behalf.
Forex Hedge Funds
This is similar to a manage fund in that you allow someone else to trade for you. It’s different in that you are pooling your money into one place with other investors as opposed to having your own dedicated account.
There is another big difference. You have to be wealthy to get in on a hedge fund. Forex hedge funds are generally unregulated. The reason they can stay under the radar is because they usually have a minimum net worth requirement to become vested.
Since hedge funds are reserved only for the wealthy, government regulators tend to ignore them. They figure if hedge funds go down in flames, it only hurts rich people who can afford to get back on their feet. In addition, they figure that the wealthy are savvy enough to not get scammed.
Funds are a great way to do forex investing as opposed to trading. It’s an alternative that many have turned to so they can benefit from the enormous forex market without having to be glued to a computer trading their own account.