Trading with other people’s money is a big responsibility. Whether you are a mutual fund manager or a hedge fund manager, the stress of having people trust you with their fortunes can be extreme at times. For the vast majority of people trading with other people’s money, a set of licenses are necessary. You typically cannot just have people give you money and start trading with it. To trade stocks for others, you need to have many different designations, depending upon what type of trading you will be doing.

Hedge funds are a different story. These typically revolve around the foreign exchange market—an open market that does not require a license to partake in directly. Hedge funds are only able to be utilized by those with over $5,000,000 in expendable assets, and in over to be classified as a hedge fund, there needs to be fewer than 100 qualified clients contributing money.
Hedge funds are designed to make money in turbulent market times using Forex Arbitrage methods. As the name implies, a hedge fund is often used for excess investing money for those who need to protect their other investments.

As such, hedge fund managers typically will buy and sell 50 or more positions on a typical day. These funds will try and make money regardless of the market conditions, so don’t be surprised when hedge fund managers use many short positions within their portfolios. Hedge fund managers are sometimes not qualified to trade public assets like stocks, so instead they will use heavy amounts of leverage in the Forex market and even options in order to secure profits consistently.