Let's look at how well the trading strategies of these so called pro traders perform and what they produce in terms of profits.
Performance of Managed Forex Accounts
Take a look at any index of discretionary funds managed by banks or hedge funds and you will notice the performance is terrible. The best of the best are compounding around 10% per annum, with only a small minority which exceed 20% per annum and keep in mind, these are funds that are tracked and the ones that fail or are closed are not counted. The performance on the whole in terms of managed Forex or any other financial product is terrible – so why do investors believe they make money?
Most investors like help in their trading and don't understand that Forex trading is simple and are blinded by smart economists from banks talking in front of banks of computers into thinking these guys know what there talking about but the performance of the fund managers tells us they aren't that smart.
The Technology Leads to Bigger Profits Myth
You can have all the money, resources and technology you want in Forex but it won't help you win, trading currencies favours simple strategies and always has. The myth of banks and brokers knowing what there doing is due to our obsession with technology being able to make our lives better and it has helped us live more comfortable lives but in trading the markets it can actually cause losses. Systems and strategies which are to complex and they generally fail to out perform simple trading systems.
Trading Commissions and Overheads
Of course banks and brokerages, when devising a trading strategy, don't focus on how much money it will make for clients but on how much it will generate in commission for the company. These companies have massive costs and the client has to pay. In terms of most funds, they trade to much and end up cutting profits to soon. Losses are never covered, by the profits and this leads to there dire performance over the long term.
For example, many banks rely on high frequency trading systems which trade in and out the markets several times of day with huge size – do they win? No but they make a lot in terms of pip spreads and commissions. The trading signals are generated on logic which is not going to work which is trying to trade the noise of the markets for profit.
Bank Traders are Not Better than You
In Forex trading the only criteria you base success on is money in the bank which has been made by trading signals and the idea bank traders are good at trading is simply not true. How many times do you see huge trading errors when they have run losses or stories of under hand business practices – all the time and this has been the same for decades.
Hedge funds are the big buzz word in terms of investors looking for trading secrets but they very often, perform worse than conventional funds. Many are offshore and subject to little or no regulation which means, they are not always performing in the interests of the clients. Of course there are a few of these managed funds which have done well but most lose money long term.
You should not be intimidated into thinking, these so called big dog traders are better than you – there not. If you can make more than 10% per annum, with your trading strategy your doing better than most managed funds and if you can make 20% or more, your up there with the very best.
You don't need a complex trading program to win and you don't have to pay a huge overhead so you can trade less and make more. You don't need technology to help you or endless research reports or even to work hard – just a simple Forex trading strategy, based on trading long term price trends is all you need to become a successful currency trader from home. So there you have it the secrets of hedge funds and banks and its not, a lesson in making profits for clients – its a lesson in making commissions and fooling the public they know some secret to trading success you don't. So the next time you see a promotion for, a trading signal service or Forex trading robot vendor which says - it's from a bank trader revealing secrets – delete it.