7 Ideas To Find A Well Performing Forex Managed Fund
The stock markets have taken a huge hit over the past few years. However, in contrast, forex managed funds have outperformed the market, beating all other asset classes in the process. Let’s take a look at this phenomenon and try to find out exactly why everyone is investing in forex at the moment.The forex market has grown massively over the last few years.. Whilst ten years ago, trading forex was an exclusive club, today all you need is a laptop, an internet connection, and a few hundred bucks to open an account.
But how should an investor judge a forex managed fund? Well, firstly, and perhaps it is obvious to say, but he should look at the performance figures of the fund. But it isn’t that easy – you might think that a monthly return of 10% in one month is good – of course, it is – but not so good when you see that the next month the manager lost 20% of the fund!
The investor should also speak with the manager of the forex managed fund and enquire as to how much leverage the manager is using. Leverage can have a huge impact on a fund’s performance.
Leverage is a killer in the currency market – whilst using high levels of leverage can bring you huge returns, it just takes one or two bad trades, and you can easily blow your account.
But what if it all goes wrong? In practice, you are already quite a lot down on your account, as you need to pay the spread, ie the difference between the buying price and the selling price. You have to realise that as soon as you enter the trade, you are in a loss position, as you need to pay the spread. Then if the market is volatile, you can soon get in a very bad position, lose your shirt, and then start to get sensible and invest the rest of your savings in a forex managed fund.
Thus the client much choose a forex managed fund which suits his appetite for risk. If he wants to shoot for the stars, and have the opportunity to make perhaps 100% or more on his account in a year, then he might choose a more risky forex managed fund which uses more leverage. Alternatively, a client who places a higher level of importance to the preservation of his capital might want to look for a forex managed fund which takes lower levels of risk, and which uses lower leverage. To summarise, then, the investor must find a forex managed fund which he is happy with, and deals with his appropriate risk profile.
The web is filled with handy resources on managed forex services, and we have listed just two examples here, where you can get more facts about a selection of important managed forex funds and critiques of individual forex managed funds and find out more about the exciting and profitable world of foreign currency trading.Other articles you may enjoy;