subject: 7 Hints To Find A Reputable Forex Managed Fund [print this page] The world recession has affected millions of people, and many have lost their pensions and savings; however if you had invested in a forex managed fund, you would be happy with your returns. Let's take a look at them, and try to understand why the returns are so much better than a traditional stock or bond fund.The forex market has grown massively over the last few years.. Back in the 1990's, trading currencies was the preserve of banks and hedge funds. Today, is a very different story, with every man and his dog opening a forex trading account online, and trying to be the next George Soros, the man who broke the bank of England.
There are a variety of factors a client needs to consider before he invests in 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 potential client should also enquire as to the leverage levels of the forex managed fund. Leverage is important, as it means the level of risk that a forex managed fund is using to create the returns.
Leverage is the main reason that most retail forex investors fail in their attempt to become forex traders themselves, and end up investing their money in a forex managed fund. Whilst it seems an attractive proposal to use high levels of leverage, this can also, of course, work against you in practice. In theory, it sounds great, you use a $10,000 to buy $1 million of foreign currency, and if all goes right, you can double or even treble your money in a few hours, on a single trade.
We will make an illustration to show how leverage can cause you to easily blow a trading account.. 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.
Consequently the investor much choose a forex managed fund which suits his appetite for risk. If an investor decides he wants higher returns, then he should realise he might lose a part of his capital.. On the other side of the spectrum, there are more conservative investors, who are happy with 10% or 15% return per year. To summarise, therefore, the potential client must find a forex managed fund which fits his comfort levels vis a vis risk, and can maximise his investment goals.
