The U.S Markets have been on a run over the last few weeks following a series of positive economic data from the department of commerce. The government reported an improved unemployment rate for October dropping to 5.8% from 5.9% reported in October.
Additionally, the jobs data numbers continued to impress for the month of October, coming up well above the current monthly average for the year so far while the economic growth rate of 3.5% beat analyst estimates of 3.0% from Q3, sending the U.S equities into frenzy.
The SPDR S&P 500 ETF (SPY, Financial), the NASDAQ 100 ETF (QQQ, Financial) and the SPDR Dow Jones Industrial Average ETF (DIA, Financial) have all been rallying over the last few weeks, in the process touching new highs. The current market movement would have been a dream adventure for long-only investors as this run came at the backend of sudden plunge, which began in mid-September. However, the last 4-5 weeks have been a revelation for those who held long positions on the various indices.
During that time, the U.S dollar (USD) has been strengthening against major currencies including the Euro (EUR), the British Pound (GBP), the Australian dollar (AUD) and the Japanese Yen (JPY) among others. This also comes after a period when the USD had experienced sudden weakening against other currencies, as Federal government remained indecisive on QE. However, since ending the quantitative easing program, the USD has been on the rise.
Now, over the years, investors have often made a terrible mistake by getting into the market when conditions look promising. However, top hedge fund managers will advise that getting in the market when things are looking south is the perfect time for all long-form investors. In other words, this is the best time to invest. However, when it comes to trading, that card is never an ace in the portfolio strategy of the trader.
In trading, profits can be made regardless of the direction of the market, and every trader knows this. Even the novice traders are aware of this unique opportunity. However, unlike in long-form investing, trading has its own risks especially if you are a novice, or in the case where, a trader does not have all the time in the world to float those complicated charts and analyze them in bid to cutting the risk of loss.
These are cases when the importance in understanding the benefits of Managed Forex accounts becomes so crucial. Managed Forex accounts account for a large majority of global FX transactions, roughly $3.4 trillion out of the $5.4 trillion traded on a daily basis. This indicates their popularity to the trading community and in another way, the importance traders have placed on them.
For instance, considering the recent market situation where the USD along with the various ETF counters have fluctuated at great degrees, this might have been the worst nightmare for a trader who had no time to analyze the market fully, or for a novice trader who had no clue of what the various economic events could do to the market.
In this case, opting for a managed Forex account would have been an ideal solution, because generally, managed Forex accounts are lead by Forex trading experts, whose business is trading and have all the time to analyze the daily activities of the market.
Additionally, in Forex trading, it takes more than guts to succeed, because the market tests a trader’s technical ability, as well as, tactics and nerves. Therefore, as an individual trader, it is important to note that during times like these, when the USD and various indices switch positions almost in a fortnight, the opportunity for profit is enormous.
For instance, holding a short position on one of the various indices in mid-September would have paid handsomely when everything tanked to the bottom, while taking a long position four weeks ago, would have done the same by now. However, it is possible that a majority of traders and investors who never had the time to do a thorough assessment of the market could have easily entered the market at the wrong time. That is, buying in mid-September and short-selling 2-3 weeks later.
Conclusion
Many traders want to manage their own portfolios, but this could turn out to be a nightmare if they do not have the time and/or the expertise to take a well-calculated risks, because after all, this is how you make profits. Additionally, experience in Forex trading is also crucial as this helps instill nerves of steel to traders, thereby avoiding emotional trading, which has been another huge drawback for novice traders.
The bottom line is that managed Forex accounts help such traders make as much profits as those who have been in the market for decades, and the recent price shake-up in the market is an ideal example of how unpredictable the markets could be, hence the need of technical ability, tactical strategy and nerves of steel in Forex trading.
