The Time Frame of a Forex Funds Investment

Investing in Forex is speculative and tends to be cyclical. Additionally, even the most successful professional traders experience periods of flat returns or even drawdowns. Consequently, those trading periods will suffer losses. The wise investor will remain steadfast in his/her investment plan and not close the account prematurely to allow the account to recover from temporary losses in equity. It would not be a wise investment strategy to open an account that you do not intend to maintain for at least six to none months.

What Is The Difference Between A Hedge Fund and A Managed Account

A hedge fund is defined as an aggressively managed collection of investments that uses sophisticated investment methods such as gearing, long, short and derivative positions in the domestic and global marketplaces with the objective of producing high returns (either in a total sense or more than a particular sector benchmark).

A hedge fund is a private investment partnership, in the form of a corporation, that is open to a limited number of investors. The corporation almost always mandates a substantial minimum investment. Opportunities within hedge funds can be illiquid because they frequently demand investors maintain their capital in the fund for a minimum of twelve months.

Correlation And Forex Investments

Correlation and Forex funds investments must be well understood prior to making an investment.  The term “correlation” is used to describe the relationship between two Forex funds investments. Correlation will define how to investments are related to each other.  Correlation is measured by calculating the correlation coefficient. The correlation coefficient will always be a  ‐1.0 to +1.0. If the correlation coefficient is a negative number, the relationship between the two investments is negative; i.e., if one investment moves up, the other investment moves down.  A positive correlation coefficient is a positive number the investments will move in the same direction.  If the correlation coefficient is zero, this would mean the two investments are not correlated and an investor can expect them not to move together over time. Ideally and investors portfolio should have a correlation coefficient of close to zero as possible.  Forex investment funds will generally have a correlation coefficient very close to zero when compared to other investments.

Managed Forex Accounts and Diversified Portfolios

Forex and Portfolio Risk Reduction

Forex can help decrease risk in an investment portfolio through diversity.

With prudent allocation, a managed Forex account may help reduce the overall risk of a portfolio. A sensible investor should ensure that at least a portion of their portfolio is allocated to an alternative asset that has the potential to perform well when other parts of the portfolio may be underperforming.

Other potential benefits of a managed Forex account may include:
• Historically competitive returns over the longer term
• Returns independent of traditional stock and bond markets
• Access to global markets
• The unique implementation of conventional and non–traditional trading styles
• Potential exposure to as many as one hundred and fifty markets globally
• The Forex market typically has a high degree of liquidity.

If suitable to a client’s objectives, devoting twenty to forty-five percent of a typical portfolio to alternative investments may increase returns and lower volatility. Because alternative investments may not react in the same way as stocks and bonds to market conditions, they can be used to diversify investments across different asset classes, potentially resulting in less volatility and less risk. While it is true that many Forex managed accounts have historically profited, there is no guarantee that an individual managed Forex program will continue to benefit in the future. There is also no guarantee that an individual managed Forex account will not suffer losses in the future.