Ever wondered what kind of returns professional currency trading funds achieve? With all the hype surrounding Forex, what is realistic and what not? Look no farther. Parker Global Strategies released currency funds performance data for 2008. Company maintains Parker FX Index, which tracks 72 trading programs run by 62 firms. Money under management in those funds tops $32billion. This provides for a viable sample of total Forex trading programs. According to the report, 2008 was the best year for the industry since 2003. Funds included in the sample advanced on average 4.92% for the year. These above average returns were attributed to rate cuts around the globe which created increased volatility. Computer run funds, or program trading entities, gained, on average, 4.2%. By contrast, discretionary traded programs achieved returns of 6.05 %. It would seem that human brain outperforms computer.
I’m sure this comes as a surprise to a lot of people, that the best period in 5 years produced only about 5% return for professional money management companies. Reality can be rather disappointing. On the bright side, if you had a few percentage point return on your account last year, you are as good as the pros! This should cheer up a lot of people. Of course, these kind of funds are extremely risk intolerant, much more so than even most experienced individual traders, so by default, it would be very unlikely, and rare, for them to achieve double digit returns. I think sometimes they are more in money preservation business, rather than money making one. This is just my personal opinion.
My own money making has been more like money churning today. None of the trades presented here last couple of days happened. That’s OK, the orders are still valid. I took a few short term long trades in GBP-JPY. This is how money churning looks like.
There is no point in going over these trades one by one, but this more than I normally take. Typical day will see , on average, two trades. Guess it was the effect of a narrow range for the day with a lot of half ass moves. There is another one under way right now, with an entry at 128.48 and 60 pips objective.
I’m adding another buy order that can be posted here. It is a buy in NZD-JPY.
Intended entry is at 46.08 and target 47.00. Looks to me Yen is getting weaker, so I’ll likely have more JPY trades.
Hope nobody is depressed by how unimpressive the pros results are. In my view, individual trader can do much better, but not over night. It takes some time, yet it is do-able.
Mike K.
This is an eye opener. I never saw statistics for these funds. Can you share your results for last year? I don’t mean in dollars, but in percentages.
Since I don’t solicit money for management, there is no point in disclosing it. However, I can tell you that they are better than the ones in report.
Your gbpjpy trades don’t look too bad to me. And the one not on the chart, should have panned out also. I’d call it very good results
They are not bad, considering how choppy the action was. Just way more than normally.
It is sobering to see the results of forex trading funds. Nothing impressive at all. Better than stock funds for last year, but not over time. Makes you think if it is worth the time and effort.
Renata, I think it is worth it. Problem is, most people, after reading a couple of books or overstated emails, think this is easy and fast. Expectations are out of proportions to reality. With time, though, there is no reason why individual trader shouldn’t do better.
Check out the Barclays Managed FX Index. Just as uninspiring.
If trading pros get such sub par results, how come general public has an impression that fortunes can be made easily? I’m sure there are people who make a lot of money trading currencies. And it must be more than two or three.
Well, Forex has an appeal of wild west of trading. large daily moves and huge margin make possible for monstrous returns. Unfortunately, these same reasons will also eventually result in massive losses. There is number of books and trading programs by people who claim that they turned say 10,000 into a milion. Some of these stories are true. Here is the thing though- can they do it again and at will? Very, very unlikely.