Learn Forex – Forex Investing
Learn Forex – Forex Investing
What is forex investing?
Like all investing it is about making a stable return on your investment and then compounding this investment overtime to grow your money. In this example it about using the foreign exchange market to achieve the returns rather than stocks or commodities.
How do you use the foreign exchange market for investment returns?
You could find a fund that deals with currency exchange and buy shares in the fund. This would allow you to benefit from access to the forex market. There are many funds available and they can be bought in different currencies such as the US Dollar, Euro, Sterling and Australian Dollar.
Example of 3 funds (US Dollar, Euro and Australian Dollar) taken from fidelity fund tracker (04/sept/2012)
Each result shows the profit / loss from £1000 invested at the beginning of the term.
1 year results
US Dollar… £1,020.09, +2% increase
Euro… £903.41,-9.7% decrease
Australian Dollar £1,010.29, +1.02% increase
The returns over the last year have been either very tiny growth or have been a negative return. This is before the fees for the fund have been deducted.
Let’s look at the past 5 years
US Dollar… £1,313.80, +31.38% increase, +6.27% increase per yr
Euro… £1232.48, +23.24% increase, +4.64% increase per yr
Australian Dollar £1,931.15, +93.11% increase, +18.62% increase per yr
With 5 years of being in the fund you would have been lucky to get more than 30% increase. Being in the right fund and you would have nearly doubled your money.
Is there another way?
Fortunately there is another way to invest in forex and make much better returns. This is by using professional traders who trade on your behalf. You then follow their trades and make a much greater return.
To do this safely you have to use a risk management system that puts you in control. Using a risk management system means you are free to pick and choose who you want to trade your account. The professional trader is only there to open and close trades and make profit. Your risk management system is there to control your account. You are in control of your management system.
How easy is a risk management system?
A risk management system is very easy to use especially if you use a ready made platform. By entering a few variables such as the current prices of currencies you can manage your own trading risk. These simple steps gives you access to the world of forex investing.
How much return can I expect?
This s dependent on the trader you follow however 30% to 90%+ per year is normal.
Let’s look at 3 separate traders
£1000 invested for 1 year
Trader 1 £1,880.20, +88% increase
Trader 2 £1,656.04, +65.6% increase
Trader 3 £1.403.06, +40.3% increase
The results from using a risk management system combined with a professional trader can be a marked improvement to investing in a fund. When these results are compounded over 5 years the results can be fantastic.
You can compound the results because the risk management system allows you geometric your profits while maintain the same risk profile.
Compounded over 5 Years
Trader 1 £23,484.93
Trader 2 £12,453.79
Trader 3 £5,436.11
Is it safe to trade?
As long as a risk management system is used and the professional traders are profitable then the system is safe. Remove any part and the system will not function as designed. The key is to let the trader do what the trader does. Make money.
Your job is to be a risk manager and keep the trader working within your risk management system. This all happens on web based platform for full automation. You don’t have to communicate with the trader just use the online interface. If you can do this you can grow your money with forex investing.