
Ability to Trade in Rising or Declining Markets
Unlike equity and currency manager employs both long and short positions with equal facility. In currency trading there is no difference in trading potential between a long and short position. Because of this characteristic a currency portfolio is not 'biased long' but able to trade under any market conditions.
Global Diversification
The performance of equity and fixed income investments in one country is often highly correlated with the performance of equity and fixed countries. As a result, global portfolios composed solely of equity and fixed income investments lack full diversification, even if they are geographically dispersed. Investing in currencies gives investors access to markets beyond equity and fixed income investments, providing more complete diversification and a reduction in portfolio risk.
Risk Control
Investing in currencies incorporates disciplined risk control procedures in order to limit risk and achieve the smoothest possible growth in its investors' account value. Leverage is an acceptable and useful tool when used judiciously and with strict risk management techniques. Investors in currencies are therefore able to achieve a high rate of return with a level of risk control that is not possible with traditional "buy and hold" investments. Although returns are far from guaranteed, professional hedge fund managers tend to out perform individual speculators by their deployment of disciplined money management techniques and a system trading approach. Professional hedge funds also tend to use their leverage more judiciously thus avoiding sudden catastrophic losses. |