Forex investing is different than trading. Let me explain. Investing is finding good assets with good fundamentals that is undervalued by the market and one in which you expect the value to rise over time. Forex investment is not as concerned with daily volatility and fluctuations. An investor expects his assets to have peaks and valley on any given trading day. He’s comfortable with that because he’s in it for the long haul and already expects that some days will be better than others.
Trading on the other hand is more attuned to the current market prices, short term gains and technical analysis. Traders are more concerned about daily price volatility than investors. In fact, traders love volatility because it provides them opportunities in price fluctuations and liquidity for short term gains.
The forex market is mostly known for trading. Traders rarely keep a position with any currency for an extended period of time. They are always sniffing the air for any events or market forces that might give them an opportunity to buy or sell a currency.
This turns many people off from forex trading. People who investigate this market find that it involves too much day trading. Most who turn away from this asset class don’t have the time or energy to learn how to trade this market, nor do they have the time that is required to successfully trade on a regular basis. They discover that the forex is not a leave it and forget it type of investment.
Although forex investing is not commonly discussed in this market, it is an option for those who want to profit from this market like so many others have, without having to invest the time that it demands. Here are several strategies that investors use to take part in this massive game.
Forex Investment Fund
Probably the most easy and simplest forex investment strategy is getting in on a forex managed account. This would be similar to investing in a mutual fund in the equities market. It’s probably closer to getting in on a hedge fund, except without the massive net worth requirements. The only difference might be is that you have your own account. Your money is not pooled with a lot of other people. It’s your money in a single account that is being traded by a money manager.
Forex managed accounts usually have a professional money manager or a team of traders who make the forex trades on your behalf. They do this for a fee of course. But if you find one that performs well, the fees will cover themselves.
The advantages of investing in forex this way is many. First of all, you are leveraging the experience and expertise of professional traders. These are managers who generally have history of proven performance in the forex market.
Not only do you get to take advantage of these traders’ experience, you also benefit from the proprietary trading platforms, systems and strategies that they utilize to make their trades. Some of these funds employ experts called quants. These are essentially geniuses who wade through large amounts of financial data, write software to analyze them and know how to spot and execute opportunities based on these complex set of data sets.
If you do have the net worth for it, you can invest in forex hedge funds. These exclusive funds usually have some kind of a black box method of trading. However, in recent days, as the hedge funds have started to make a come back, they are starting to show a lot more transparency than they used to. This is partly to attract new investors, although they will never reveal the entire process. If you are interested in investing with them, you don’t want them to reveal their forex secrets either.
Fundamental Analysis | Currencies and Economic Indicators
There are fundamental factors that move the currency market that many traders often overlook. These come from economic indicators like GDP, jobs reports, retail sales and consumer price index, all of which affect currencies.
Many choose to base their trading on gold prices as well. The gold market is a good indicator for the forex market because gold and foreign currencies are so closely tied.
You don’t have to be a day trader to be involved in the currency market. There are a couple of options for investing in forex that you can take advantage of. These are just a couple of the ones that are currently being used today.
Most of what you will see on this website and any other financial publication are forex trading strategies like technical analysis, options trading and the like. But if you want to do more long term investing that you don’t have to constantly micro-manage, these are a couple of common options.