Our investment philosophy focus on long term capital and income growth. It didn’t start off this way.
We knew foreign exchange well from academic research and started out in personal Forex and equity trading before moving on to professional investment management for a living.
FX trading to us is a mix of passion for markets, appetite for lets face it gambling by express our economic viewpoint with money on the line still holds a special position in our approach to markets.
However we are conscious of the inherent leverage and extreme risk associated with Forex trading. It is exacerbated in times of extreme where markets have a habit of overshooting.
Another risk on forex trading is the limited regulation of the brokers. We use online share trading brokers for mostly equity investments.
Due to international nature of the financial product, the online forex brokers usually are location in countries with limited investors protection. There are only a few listed forex brokers like FXCM.
Forex Trading Strategies
Some ways to profit from forex trading include capital appreciate and carry trade. Capital appreciate is simply betting one currency will rise against another. It is the ultimate relative value trade. Carry trading strategies is when you short a low interest exchange rate like the USD.JPY and invest in higher yield currency.
This was favoured pre GFC where global interest rates where much higher. AUD.USD, AUD.JPY and NZD.JPY were popular with Mrs Wantabe (Japanese traders – typically housewives with excess disposable income). Current carry trade pairs include Aus dollar to Euros.
After the GFC carry trades increased in risk as developed market interest rates fell off the cliff. For investors that are yield hungry, you would have to buy emerging market exchange rates which are much higher in risk. The recent performance of Emerging Markets shows how risky these bets could pan out.
Forex traders like technical analysis as while others like fundamental analysis.