What is a 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. 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
managed forex accounts, and spend all of their time and effort
strictly in the currency exchange. This gives the investor
confidence their managed 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. 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
managed forex account even if the account is not in profit for
the month.
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. 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.
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.
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 your managed forex 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.
We offer managed
forex accounts for high net worth clients. Please
contact us for
details!
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