Joseph Edward J Thompson

翻訳の表示

What is multi-strategy trading in hedge funds and how does it apply to forex?

Multi-strategy funds combine different approaches—macro, relative value, arbitrage, trend, and volatility—under one portfolio. In forex, this diversification reduces reliance on any single edge. Example: a fund might hold a EUR/USD macro short, a relative value EUR/GBP vs. GBP/USD trade, and a volatility arbitrage option position simultaneously. Benefits: smoother returns, lower drawdowns, and adaptability across regimes. Risks: complexity, higher costs, and difficulty scaling retail versions. Institutions allocate capital dynamically, shifting weight to better-performing strategies. Retail traders can mimic this by splitting capital across systems (e.g., one trend-following, one mean-reversion, one event-driven). Multi-strategy trading reflects professional portfolio design, where survival depends not on one bet but on balanced exposure across edges.