On Investment Funds

Written by JS T. Alexander | 20 April 2009

On Investment Funds:

The appropriate amount of investment as others would say depends on a certain percentage of one’s net worth. The funds that are normally in excess of a lifestyle that has met and exceeded the investors comfort level. These are considered the ultra rich and the higher tier of the echelons.

However, for the sophisticated investors with the highest caliber of involvement in the Foreign Exchange Market it is approached in such a way that speculation and investment strategies are combined to achieve the financial objectives set in the preparation of the opening accounts. These accounts has the parameters of monitoring, amount of exposure in any single or multiple transactions, risk tolerance levels, profit potentials and timetable of such executions of orders directly and indirectly from the investor / clients. A checklist and proper due diligence should be exercised at all times prior to trading in this highly volatile market.

Where price swings can be made within a few seconds of a major report from any political policy, economic statements and business conditions to man-made events and even weather related conditions. These are just some of the fundamental factors that affect the price fluctuations that create the volatile swings in the market place. The technical factors are based on formulated trading systems designed by statisticians, mathematicians, analyst / traders and are based on algorithmic formulas that defines all possible summation of  an active financial, stocks or commodities market.  

So the overall goal is simply to allocate an appropriate amount where the account in itself would not be constrained from having a substantially good working capital and the corresponding leverage could be used to level the risk and playing field of the market especially when it is needed during difficult and volatile periods. As the saying goes in the industry, ' size matters '. It is true that the size of the account is equally important and should always be in parralel with the overall objectives set by the investor. It should have an established tolerance level where unexpected price swings could be  absorbed with ease without having to infuse additional working capital. But that entails having to control the amount of exposure within a given time period. Enough elbow room is what most of our plans are based on and with the amount spread accordingly and still using the appropriate percentage on leverage this can be a working model for trading. By defining the conditions of the market place, investors must be made aware that the perceptions of the traders / participants would also depend on the on going market situation. On the other hand, market conditions do influence the investors / traders' perceptions when interpreting what is going on in the market place. As breaking news travel at the speed of light and is being delivered instantly has they occure. With different time zones, most market reactions are quick to move often right after the news occurs. But then, some change of hands would eventually follow. As most experienced and novice traders like to trend the market as they move in the event of making a significant gain at the minimal / pre-calculated risk. Remember that wishful thinking does not work in this kind of a market.

Now that the most important issues of how much investment funds would be appropriate, it is the investor / client that makes the final decision as to how one would allocate their overall assets. Liquidity plays an important role for one. And secondly, investors who would be speculating this market do expect that if and when they choose the right adviser / consultant that they would win more than loose in the trade. Make certain that investors follow a strict guideline and due diligence before and after opening of any accounts with any broker / dealer. Just choose wisely!