Table of Contents
- Why Managed Forex Account
- How Managed Forex Account Works
- How They Manage Your Account
- Choosing Right Company or Firm
Why Managed Forex Account
Many people are drawn to the forex market due to high liquidity, 24 hour trading, low startup costs, and a number of other attractive reasons. However, some traders are unable to sufficiently learn or trade currency due to a conflicting full time job or other obligation. Also, many investors like to supplement their existing portfolio without having to learn a completely new market.
How Managed Forex Account Works
This is where the “managed forex account” comes in. A managed forex account is an established live forex account funded by the investor, and traded by a company or professional. This allows the investor a reasonable rate of return on an account he does not necessarily have to trade himself, and the opportunity to be a part of the largest market in the world.
There are literally hundreds of companies and investment firms that make use of an investor’s money by establishing a managed forex account. Some of these companies and firms specialize in accounts, and spend all of their time and effort strictly in the currency exchange. This gives the investor confidence their forex account is being traded by a professional currency investor, and gives them a better chance of a steady monthly (or yearly) percentage of return.
How They Manage Your Account
The returns on a managed forex account have been advertised anywhere from 5% to 20%+ monthly, with a 10% to 40% of the profit as a monthly (or yearly) fee to the company or firm. Alternatively, many companies and professionals may take management fees on the account even if the account is not in profit for the month.
Choosing Right Company or Firm
There are obviously many up sides to a managed forex account. The investor is able to achieve a steady rate of growth without having to spend all the necessary time and effort to trade the money himself. The investing firm or company that provides the managed forex account will take a small portion of the profit for the month or year, still assuring that the account is at steady growth.
Trade In Rising And Falling Market
The forex market is a very liquid market as well, giving the investor a much more flexible means of withdrawing funds from the managed forex account. Also, trading currency allows profit potential in both rising and falling markets, giving the experienced money manager more opportunities to grow the investor’s account.
Bot And Manual Trades
Two of the major types of managed forex accounts are those traded manually, and those traded by an automated “trading bot”. Trading bots are pieces of software that automatically trade currency based on a hard coded set of rules. A coder will write the system and money management rules into a variety of programming languages to produce software that could provide a more regulated steady rate of return for the managed forex account than the manual trader.
This gives the ability of the company or professional to advertise a set rate of monthly (or yearly) growth. Some of the more traditional companies and individuals alike prefer to have their funds traded manually, as the human interaction aspect can sometimes yield smaller drawdowns and larger returns.
Minimum Investment
As a managed forex account seems like a very lucrative direction to take in the forex market, some people may still be drawn away from it for a few select reasons. Usually, many commercial brokers and investment firms have a minimum for the account to be traded. These minimums are usually around $10,000, and prove a hefty starting cost to the average trader.
Also, many of these companies can (and usually do) promise high returns. In spite of these statements, the majority charge a monthly management fee to you account. If your monthly return is less than the standard monthly charge, your managed forex account will be in the negative even though before the fee, you were positive. Great care must be taken in selecting your forex investment firm, as to minimize your losses due to weak months.
Managed forex accounts can be an excellent way to grow a large account, or provide a steady rate of growth over a long period of time without the hassles and emotional swings of trading currency yourself. If the investor has both the capital and a reputable investment firm or professional, a managed forex account could prove to be a great investment opportunity.
Leave a reply