You Can Learn How to Make Money Trading Foreign Currencies
If you are considering starting an investment club, you may want to think about specializing and becoming a FOREX Investment Club rather than a general investment club. FOREX refers to the foreign currency exchange market, and will open up your horizons to investing in currencies and markets outside the United States. In FOREX investment clubs, you are trying to make a profit by trading in foreign currencies. As currencies move up and down against the dollar, there is the potential for you to profit from these changes in valuation. This type of investment is much riskier and more volatile than investing in stocks or bonds. However, some investors believe that there is also a greater potential for large profits. Some professional money managers include the FOREX market in their investment portfolios. Many individuals and small investors avoid this market. In fact, most currency traders recommend that new investors not risk any money that they cannot afford to lose. Joining or starting a FOREX Investment Club may be one way to spread the risk and the research among several interested investors.
Before you start, you may recommend that all your potential members read a book like "Forex Made Simple: A Simple Step-by-Step Day Trading Strategy for Making $100 - $200 a Day." This book gives a detailed explanation of how the FOREX market works and will help your potential members decide if it is something they would like to do.
How to Start a FOREX Investment Club
In order to organize a club that specializes in the FOREX markets, you will want to carefully consider who you should invite to join. Your members will need to be willing and able to learn about foreign markets, and be financially capable of contributing a set amount of money each month into the funds that you are using to invest. Your members must also be willing to leave the money invested until they either cash out of the club, or the club disbands. This means that they may end up having their money invested for 5 - 10 years or more, if they are successful at making money. The members of your club should be willing to reinvest all profits back into the FOREX market, as well. Members of your club will also have to be interested in doing research on foreign currencies and attending the meetings. They should understand that an investment club is not a mutual fund, where they can simply deposit their money each month and let someone else manage it. All members need to be interested in learning about the foreign currency markets, and willing to research and follow the club's investments.
Many experienced money managers do not believe that the FOREX market is a good idea for inexperienced investors. However, some brokers have programs that will allow you to learn how to trade on the FOREX by trading a demo account, first. The FOREX market is also frequently used as a type of day trading by many investors. Often the money is only invested in a particular position for a few hours or a few days. During this time, someone will need to closely monitor the investment and be prepared to pull out quickly as things change. All this is important information to reveal to anyone who wants to participate in your club. If potential members are still interested, despite the risk, then they may find that FOREX investing is fascinating and, hopefully, lucrative.
Elect Your Club Officers
Once you have found a group of members who are interested in investing in foreign markets, your club will hold its first election of officers. The most important officer your club will need is the treasurer. Your treasurer will use investment club software to keep track of your trades, and prepare the annual tax returns for your club.
In addition to the Treasurer, your club will want to have a President to organize the meetings, and a Secretary to keep the minutes. Some clubs may also have a Vice-President who will lead the meeting when the President is unable to attend, or who will perform whatever other duties the club assigns. For example, the Vice-President might give a monthly report on activities in the foreign markets that could affect your investments.
Organize Your Club
Your club will need to be organized as a legal investment partnership. It is usually recommended that anytime you are pooling money for the purpose of investing, you should have Articles of Incorporation that spell out the ownership and organization of your investment club. You will also want to write up some of your general goals or plans for your club. For example, you will need to determine how much money each member will contribute monthly. You will have to set standards for the investments you plan to make. Everyone needs to be willing to research the investments that you are considering. In addition, your club will have to decide in advance on issues such as how you will handle buying out members who resign from the club, or people who would like to join after the initial group has started the club. With the correct investment club software, the monetary implications of people leaving and joining the club can be handled smoothly.
Educational Training for FOREX Investment Clubs
Once your club has organized, you will want to contact winningtradersassociation.com. This organization provides training and information for individuals and clubs that are interested in trading on the foreign currency exchange. From the very outset, they inform potential members on the first page of their website that trading on the foreign currency market is extremely risky, and you should not invest money that you cannot afford to lose.
Another organization that you may want to contact is ForexStrategySecrets.com. They have a lot of information on their website, including FOREX trading courses, education, trading tips and much more.
Wise club organizers will spend a lot of time educating their members, and completing practice trades before they attempt to become involved in currency trading.
FOREX Investment Clubs Should Diversify
All investment clubs should diversify, so that you never have too much money invested in any one stock or currency. This is especially true in the foreign currency markets, where a sudden and unexpected change in a foreign government's financial situation can cause a drastic change in the value of that nation's currency. Some professional money managers only trade in FOREX investments as a portion of their total portfolio … with most of their investment remaining in more conservative growth stocks.
As long as all the members of your club are aware of the risks, participate fully in the decisions, and are willing to spend time studying the FOREX markets, then your club can be an exciting and interesting way to invest some of your assets.
If you are interested in investing or suggestions for handling your personal finances, you may also be interested in reading these articles:
Another Book To Help You Succeed in FOREX
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