Forex Hedge Fund Risks

Risks of Forex Hedge Funds

The off-exchange foreign currency markets are unique and pose certain risks to the investor.  Forex hedge fund managers must make sure that they inform their investors of the unique risks of investing in the forex hedge fund and in the off-exchange foreing currency markets.  Your forex attorney will be able to help you decide which risks are most appropriate to your forex trading program or your forex hedge fund, but we’ve detailed some of the central risk which will need to be described in the forex disclosure documents. 

Forex Hedge Fund Risks

• Forex trading can be highly leveraged
• Forex trading is speculative and volatile
• Forex has no centralized exchange market
• Forex interbank market is unique
• Default of Forex Dealer Member or Futures Commission Merchant (see Refco)
• Lack of Regulation of Forex Markets
• Potential lack of liquity in certain Forex currencies
• Stop losses may not be effective

If you have any questions on these forex hedge fund risks, please feel free to contact our forex attorneys for a forex hedge fund consultation.

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