Now is the best time to invest in Forex Funds. The importance of having assets diversified into a Managed Forex Account has to do with balancing a potentially adverse move in financial markets with the opportunity to capture return from resulting currency market fluctuations, in addition to potentially realizing performance when markets are less active yet shift gradually over a longer period of time.
While such volatility -whether daily or yearly – can bring risk, it can also bring reward if done with the right timing, and methodology in order to be successful over a longer period of time or larger number of trades.
Why Forex Funds? I already know how to Trade Myself
Just as a well-diversified portfolio consists of different holdings, strategies, asset classes and various types of investments and instruments, so should a Foreign Exchange portfolio.
Traders with significant Forex portfolios may have numerous accounts, with a diversified structure as noted above, in addition to trading for themselves, and/or running automated trading robots or signals on their own.
The terms Managed Forex Accounts generally means that an investor is allowing a money manager to manage the investors Forex account, which is held in the name of the investors and preferably at a regulator brokerage, and trading authorization is given on a limited power of attorney (POA), which only allows trading (not withdrawals or deposits) by the fund manager, until such authorization is revoked or funds withdrawn by the investor.
Generally however, investors look for consistency in performance, along with consistency in what is described (versus what is achieved), as well as the reputation and background of the fund manager described. Again, even a consistent track-record is no assurance of future results, reviewing historical performance should be part of every investors overall investigative due diligence.
Making The Hard Decision Easy
There are a number of other differentiating factors both quantitative and qualitative, that will be materially relevant for an investor who may be considering to deposit funds and establish a managed Forex accounts under an offered program.
Once proper due diligence and disclosures have been considered, and a decision made to invest, the funds should only represent a portion of the investors holdings, as a means to diversify either a larger Forex portfolio, or a multi-asset portfolio where the Forex fund will represent the first component or dimension of Foreign Exchange exposure, and not a medium for an investors entire cash holdings.
This should be true, regardless of dollar amounts, or how much a fund has in Assets Under Management (AUM), and should instead represent a percentage of holdings that an investor is allocating in an effort to diversify, while considering the profit/risk potential weighed against the subjective odds.
Account Opening, Funding, What’s Next? What Should I Expect From Investing?
Most technology-driven online brokerages operating in regulated jurisdictions, involved in Forex, provide rates, and help facilitate execution of trades, by Forex fund managers, however, not all funds are available at all brokerages, therefore, consideration must be made, as to which fund AND which broker is involved, hence the due diligence is also required to be done on the brokerage.
Once the brokerage is chosen, following an account opening process, and limited power of attorney (LPOA), the investor should have access to real-time or end-of-day reports, in order to access a statement of holdings within the account, including unrealized profits and/or losses, at any given time.
The investment horizon for the fund, may include a daily, weekly, monthly or even yearly target, and accordingly should be reviewed periodically to ensure to what degree the performance is aligned with these expectations, and a key feed-back mechanism for investors to tell how things are doing with their investment.