Hedge funds are an important players in the market. Hedge Funds pool the money of rich people and then employ high risk strategies to make high returns for their clients in a short period of time. Do you know what happened to one of famous hedge fund Long Term Capital Management also known as the LTCM fund. LTCM was managed by Nobel laureates. It took too much risk and bet almost a trillion dollar on a single bet. Whatever there are many hedge funds that collapsed. When a hedge fund starts losing a death spiral starts that ensures that there is no mercy by the market. Watch the documentary below on hedge fund trading strategies.
https://www.youtube.com/watch?v=aGNH1oNPuDc&t=50s
Today hedge funds are drawing the best and the brightest in the academia. These new breed of hedge fund traders have much better models having learned from the demise of hedge funds like the Long Term Capital Management. Hedge fund business is a serious business. After all you are trading with someone else’s money. Did you check our Million Dollar Trading Challenge II in which we solely focus on trading binary options?
Hedge Fund Quantitative Trading Strategies
The idea of Million Dollar Trading Challenge II is simple. We have developed an app that you can install on your mobile phone. When you have time you open the mobile phone and the app will give you signals on trading binary options. After watching the above documentary you should realize how much serious these people are. Most of them have advanced degrees in mathematics and physics. Most of them are experts in quantitative modelling. Markets constantly change. Watch the video below on how hedge fund strategies are adapting for the future.
More and more hedge funds are using quantitative trading strategies meaning algorithmic trading. These algorithmic trading strategies are programmed by the quants employed by these funds. Sometime these algos go rogue. The recent example is that of the British Pound Flash Crash that was allegedly caused by a rogue algorithm. Whether it is an algo trading hedge fund or a traditional hedge fund, all of them have basically the same trading strategy. All focus on making high returns in short periods of time and face death when they ignore risk management.
Did you check our Million Dollar Trading Challenge Forex Trading EA? Markets are today swarmed by hedge funds all promising high returns to their clients. What happens? This develops into an epic Olympic gold medal sprint races. Everyone is trying to make a high return. The one who is ahead of the crowd is the winner. Winning meaning you should be the first to get the information that the rest of the market will get later with a delay. This race entails taking high risks. Most of the time this risk taking results into a death spiral for the hedge fund.
Today hedge funds are global players. Some have billion dollar portfolios. When arbitrage opportunity is spotted in a foreign market, the first fund that spots that opportunity is the winner. Once the arbitrage opportunity vanishes, hedge funds vanish like vultures looking for a new opportunity.