Starting a Hedge Fund Using Forex Trading Strategies

A few hours later, while markets remain active in those Asian centers, trading begins in Bahrain and elsewhere in the Middle East. Futures markets are a bit simpler to understand but carry a greater risk for investors. Click here to read about the latest Hedge EA Advanced v1.

Strategy Two

Over the last two years, investors have pulled speculative capital out of risky assets at an unprecedented rate. In fact, analysts estimate there is currently billions of dollars of investment capital on the sidelines as investors are still unsure of the long-term economic outlook for the United States economy.

Most of this speculative capital that is on the sidelines is earning investment managers and qualified investors close to nothing. The Federal Reserve, of course, has set interest rates at an absurdly low level, which means investors who have capital in very safe, low-risk investments are earning virtually nothing. Capital has begun flowing back into higher risk investments such as hedge funds this year as the global economy strengthens.

One specific market where hedge funds are continuing to grow is the foreign-exchange market. The forex market is attractive for many reasons, but chief among them for larger hedge funds is the deep liquidity and cheap transaction costs. These two features significantly reduce the cost of doing business for most hedge fund managers.

In the forex FX market, however, the potential for the loss of funds is very real. The FX market is a 24 hour market that never stops, and it moves extremely fast. The high leverage available in this market leads to quick, sharp profits, but it can also lead to destabilizing losses in a short amount of time.

If a forex trader or investment manager is looking to start a hedge fund , there are several key steps he needs to take. This is the key to building a fund. Although some investors will not require a full 2 years, the Crisis has caused most investors to be much more risk-averse in their decisions, and they oftentimes will want to see a solid two year record.

Remember, your volatility curve needs to be very smooth as well. Gains are not all that matter—the gains have to be made in consistent manner. Most qualified investors will want to see fully audited trading records in order to assure that the results are real and accurate. There is no standard fixed contract size, nor are there any commission fees or any other additional transaction costs involved. All prices quoted are 'two way', i.

This price quoted is inclusive of all trading costs. The spread may vary depending on market conditions and liquidity. Prices may vary depending of liquidity and are constantly changing.

The 'market' is alive around the clock and 'follows the sun' around the globe. It is possible to operate efficiently in the market from Positions can be opened and closed at any time throughout this period.

The international date line is located in the western Pacific, and each business day arrives first in the Asia Pacific financial centers first Wellington, New Zealand, then Sydney, Australia, followed by Tokyo, Hong Kong, and Singapore.

A few hours later, while markets remain active in those Asian centers, trading begins in Bahrain and elsewhere in the Middle East. Later still, when it is late in the business day in Tokyo, markets in Europe open for business. Subsequently, when it is early afternoon in Europe, trading in New York and other U. Finally, completing the circle, when it is mid or late afternoon in the United States, the next day has arrived in the Asia Pacific area, the first markets there have opened, and the process begins again.