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Are You Outperforming the World's Largest Forex Hedge Fund? |
by S. Wade Hansen
The first half of 2009 has been a difficult time for many forex traders---even the seasoned professionals.
FX Concepts, the world's largest currency hedge fund, is down more than 5 percent since the end of 2008.
The question is...how are you doing in your forex trading?
Have you been able to outperform the top forex hedge funds---with their sophisticated computer models and staffs of professional traders---or have you been day trading yourself into oblivion?
Have you been stopped out for dramatic losses due to the increased volatility the forex market has seen, or have you been able to find a few key trends and take advantage of them?
My guess is many traders find themselve in the same boat, or worse, as the funds discussed in the following article: 
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Essential Reading for Traders
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| | | | According to Bloomberg: FX Concepts Inc., the world’s largest currency hedge fund, says it lost 5.4 percent in this year’s first five months. John W. Henry & Co.’s foreign-exchange fund told investors it lost 2 percent, after 2008’s 76 percent gain, the best since its 1986 launching.
Both use computer models to spot currency trends and, along with other momentum chasers, are getting hammered by this year’s lack of clear direction as the markets are pulled in opposing directions. Deflationary pressure from the first global recession since World War II is being countered by the inflationary forces of record stimulus spending and currency printing across the globe.
The ICE’s Dollar Index shows the U.S. currency fell 1.4 percent against a basket of six major currencies in this year’s first half, the smallest two-quarter change since 2006. Of four currency trading styles simulated by Royal Bank of Scotland Group Plc indexes, trend-following is the year’s only loser, down 4.8 percent after also underperforming in June. In 2008, the tactic gained 9.9 percent, its best in five years.
“I am not trying to make any excuse, but certainly it has been difficult,” said John Taylor, chairman of New York-based FX Concepts, which manages about $12 billion. “Unfortunately, there’s lack of consistence of what’s happening. I am wondering how stupid the market can be for how long.”
I would love to hear what you all are having success with and where you have run into trouble.
Personally, I've taken some longer term trades on the commodity currencies this year, and they have played out well. I also caught part of the uptrend on the GBP/USD.
Of course, not having $12 billion to deploy has made my trading much more nimble than that of FX Concepts.
If you feel comfortable, please share some of your successes and failures. We'd all love to learn together.
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