FX Trading hitting mainstream hedge funds and institutional traders


Volatility and activist central banks have attracted institutions to FX trading in 2013.

Business news outlet CNBC ran an interesting piece, on why mainstream institutional traders are taking up active currency trading in 2013. It seems as though the increased volatility which has brought back retail traders to FX trading — with January being one of the best months ever for retail FX volumes — has also attracted institutional traders.

One of the more popular trades for this group has apparently been the Short-Yen-and-Long-Nikkei trade — hedge fund investors always like to find correlated investments, and to exploit both sides of the equation. Many hedge funds also like to engage in “event trading”, that is predicting the financial effect of a known real-world event. And the known event out there is the increased activity of central banks in certain jurisdictions (e.g. Japan), looking (mainly) to weaken their home currency to help exports and grow the economy.

Also, enticing articles such as another recent CNBC headline — Aussie Dollar at $1.30: Are You Kidding? — are helping bring investors into the FX trading market.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

 

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FX Trading hitting mainstream hedge funds and institutional traders

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