Investing Terms
   401k Plan
   403 Plan
   529 Plan
   12b 1
   Agency Bonds
   Asset Management
   Bear Spread
   Bond Yield
   Bull Spread
   Call Option
   Closed End Fund
   Commodities Broker
   Convertible Bonds
   Covered Call Option
   Current Yield
   Custodial Account
   Debit Spread
   Defined Benefit Plan
   Defined Contribution Plan
   Diagonal Spread
   Fixed Annuity
   Foreign Currency Option
   General Obligation Bond
   Growth Fund
   Hedge Fund
   Horizontal Spread
   Income Fund
   Independent Broker
   Index Fund
   Index Option
   Interest Rate Option
   Life Annuity
   Limited Partnership
   Margin Account
   Married Put
   Money Market Fund
   Mortgage REIT
   Municipal Bond Investing
   Mutual Fund Investment
   No Load Fund
   Nominal Yield
   Online Stockbroker
   Online Commodity Broker
   Stock Warrant
   Option Spread
   Option Straddle
   Online Real Estate Broker
   Stock Option
   P E Ratio
   Penny Stock Investing
   Portfolio Management
   Preferred Stock Investing
   Private Placement
   Put Option
   Put Bonds
   REIT Investment
   Revenue Bond
   Secured Bond
   Short Sell
   Subordinated Debenture
   Tax Deferred Annuity
   Treasury Bill
   Treasury Note
   Treasury Bond
   Treasury STRIP
   Trust Account
   UGMA Account
   Unit Investment Trust
   Variable Annuity
   Yield To Maturity
   Yield To Call
   Zero Coupon Bond

Hedge Fund Trading

An investment company or mutual fund that engages in aggressive trading and investing strategies to get their rate of return. Hedge funds use techniques such as short selling of stock and option trading.

Short selling of stock is considered a high risk than long buying, because if the stock rises after it is sold short, the security could lose an umlimited amount of value. Option contracts can also expire worthless. However, if positioned well in a hedge fund investing portfolio, they can succeed and generate very large rates of return.

Investing in these pools or to buy these funds can earn investors a very high rate of return, however there are many that do not perform well - especially in certain stock market years or interest rate cycles. Hedge funds are very sensitive to these changes. Viewing a detailed prospectus on these clubs is a very important part of deciding to invest in them.

There are brokerage firms and hedge fund trading companies that specialize in them. Over the years many of them have been successful with strong track records of returns.

Starting your own Fund

Some successful smaller investors have looked into starting their own hedge fund. Usually these are people with significant capital and knowledge of a particular niche industry.

Investors should have a large amount of risk capital and disposable securities related assets before trading in these funds. There are specialty firms who handle large pools of money for investors in this higher risk group. Hedge related pools and money funds generally can out perform the S & P 500 and other indicators in certain times of bullish periods. These money managers can also report very low or negative trading returns in times of economic downturns and market corrections.

Copyright American Investment Training, Inc. Hedge Fund Information and Fund Training Company