Investing in the Forex Market

To many people, when you talk about the forex market, they mostly think of day traders or at least short term gains.  In fact, many people look to forex as a way to invest for the future or for retirement.  It’s thought of as a world for rock star traders of large investment banks and hedge funds.  Or guys who sit in their home offices, trading their own accounts.

But in fact, there are many ways to invest in the forex market.  You can invest with a currency ETF or exchange traded fund.  These are funds that track certain sectors.  Also, ETF’s are traded on the open stock market just like any other stock.  That means you can buy and sell shares of ETF’s.  This is a great way to invest in foreign currencies without directly trading on the forex market. You can also try to fond a cheap online trading company which will take care of your trading, and all you have to do is tell them what to buy, and when, and what to sell and when.

In addition, you can also get a forex managed account to put your money in. This basically functions just like a mutual fund.  Similarly to a mutual fund, you pay a money manager a fee to trade your money for you.

There are great benefits to using manage accounts to do your forex investing without trading on the currency market yourself.  This allows you to leverage the experience and expertise of a seasoned forex trader to managed your money for you.  In addition, these brokers who offer these accounts have research, access to information and proprietary software and platforms to give them a competitive edge in the market.

They may use a variety of forex trading strategies or they may just use a few.  Most have a trading approach that they use and have found success with.  Some don’t publish their past performance online due to a variety of reasons, but they will all give you some idea on what the performance is and what you can expect.

Remember, currency trading is what brought the big investment banks back into the black after the recession and all the bailout events.  There were a handful of incredibly bright and skilled traders that brought these giant banks with thousands of employees out of a negative cashflow.  That’s incredible to me.  It shows the power and profit potential of trading on the forex market.  It also shows that a single trader can make huge amounts of profits in a short period of time.  All you need is one or two of these forex managed accounts that have one of these traders of this caliber to be trading on your behalf.  It only takes one to make you incredibly rich.

Remember, these are very similar to mutual funds.  That means you will be paying them a management fee for their services.  But if you are able to see gains like many currency traders see in their forex portfolio, the management fee should pay for itself.

If your working trading capital allows, you should probably have managed accounts with a few different brokers or money managers who have different approaches to trading.  This will diversify your risk.  You don’t want to put all of your eggs in one basket.  Even if one is very successful, because of the nature of this market, it may make up for losses on your other accounts.

Remember to look very closely at the prospectus and make sure you understand what it all entails.  Also, try to get as much information about their trading strategies as possible.  Many won’t share much of their strategies for obvious reasons.  It’s their secret sauce.  But many money managers will share just enough for you to feel comfortable or choose a different fund.  It’s also good to get a sense of the money manager or at least the managing director’s performance history or a summary of their background and experience in trading.  In this game, it’s all about the trader.