Can You Learn To Trade Like a Hedge Fund Manager? (Part I)
What is the difference between a professional trader and an amateur trader? A professional trader never goes into a trade blindly based on emotions whereas an amateur traders always trades based on his/her emotions. If you want to become a professional trader, than you need to learn from hedge fund managers, how they trade currencies. Hedge fund managers have to show good results to their investors for getting investments into their funds. Without a battle tested strategy they cant convince their investors.
As individual traders, our $5,000 account is as important as any $25 million hedge fund. In fact, our $5,000 account is more important. We are betting our own hard earned money on currency trading. A hedge fund manager is most likely trading with other peoples money.
Hedge fund managers follow a step by step process to develop and test their currency trading strategies. Over the years, currency trading has become an important part of their investment portfolio. There is no reason why we as individual traders should also not follow that step by step process to develop out own trading strategies.
It must be clear from the beginning; every trader has to find ones own edge. We should learn from other successful traders. But, it is your methods that will make you succeed in the long run. This step by step process of developing your own trading strategies like the hedge fund managers do will help you in the long run.
Properly define your trading strategy. Every hedge fund manager like every trader follows a different methodology. Some use fundamental analysis. Other use technical analysis.
The first thing that you should understand is what type of currency trader you can be and what style of trading best suits you. Are you comfortable as a day trader? Do you want to be swing trader or position trader?
The most important thing for you from the start is to figure out whether you want to trade based on fundamentals or technicals or a combination of both. When hedge fund managers develop their trading strategies they define clear cut trading rules and code them. This way they avoid the pitfalls of emotional trading.
Trading based on your emotions is not good. It will ruin you as a trader in the long run. Make a rule based forex system that is mechanical with clear cut steps that you will follow in order to make your trading unemotional.
Some trade news. You should decide if you want to be a news trader. Whether you will use technical indicators in your trading, there are many so which ones and how! There are many currency pairs. You cant trade all of them. You need to pick a few favorite currency pairs. All currency pairs are not equal. You need to focus on only a few to become a successful trader.
Every currency pair requires a different trading strategy to succeed. You need to understand this. Some strategies work best on one currency pair but dont work on others. Read more in Part II of this article how hedge fund managers develop their trading strategies. - 23222
As individual traders, our $5,000 account is as important as any $25 million hedge fund. In fact, our $5,000 account is more important. We are betting our own hard earned money on currency trading. A hedge fund manager is most likely trading with other peoples money.
Hedge fund managers follow a step by step process to develop and test their currency trading strategies. Over the years, currency trading has become an important part of their investment portfolio. There is no reason why we as individual traders should also not follow that step by step process to develop out own trading strategies.
It must be clear from the beginning; every trader has to find ones own edge. We should learn from other successful traders. But, it is your methods that will make you succeed in the long run. This step by step process of developing your own trading strategies like the hedge fund managers do will help you in the long run.
Properly define your trading strategy. Every hedge fund manager like every trader follows a different methodology. Some use fundamental analysis. Other use technical analysis.
The first thing that you should understand is what type of currency trader you can be and what style of trading best suits you. Are you comfortable as a day trader? Do you want to be swing trader or position trader?
The most important thing for you from the start is to figure out whether you want to trade based on fundamentals or technicals or a combination of both. When hedge fund managers develop their trading strategies they define clear cut trading rules and code them. This way they avoid the pitfalls of emotional trading.
Trading based on your emotions is not good. It will ruin you as a trader in the long run. Make a rule based forex system that is mechanical with clear cut steps that you will follow in order to make your trading unemotional.
Some trade news. You should decide if you want to be a news trader. Whether you will use technical indicators in your trading, there are many so which ones and how! There are many currency pairs. You cant trade all of them. You need to pick a few favorite currency pairs. All currency pairs are not equal. You need to focus on only a few to become a successful trader.
Every currency pair requires a different trading strategy to succeed. You need to understand this. Some strategies work best on one currency pair but dont work on others. Read more in Part II of this article how hedge fund managers develop their trading strategies. - 23222
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Read about Trend Forex System. Try Netpicks Forex Signal Service.
posted by X - Men @ 2:21 AM
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