Managed Forex Accounts

Who should make use of managed forex accounts?

forex_managed_accounts_iconforex_managed_accounts_iconforex_managed_accounts_iconforex_managed_accounts_icon
Managed forex accounts are perfect for an investor who has the money to invest but does not have the appropriate skills or the time to monitor and manage the account.It is an ideal investment for companies who would like to expand into forex without being actively involved in the management of the account.Would you rather have professionals handle your capital as an investor? Then a managed forex account is ideal for you.It is also perfect for any investor who would like to benefit from the resources and the experience that professional fund managers have to offer.

What to look for when choosing the right managed forex accounts?

  • They have to accept clients from across the globe.
  • Employ excellent risk management strategies
  • You do not have to pay any management fees
  • Employ a very disciplined trading approach
  • Are they fully regulated by ASIC, CySec and the FCA
  • Offer an activity report and offer real time access to trading activities
  • Do they employ highly experienced fund managers
  • Are their trades are strategic to prevent losses
  • What is their trades guarantee on monthly return

What are the main advantages of managed forex trading accounts

As investors are always on the lookout for good opportunities to invest in, they at times have to take great risks in regard to specific investment opportunities in order to gain huge profits.

So, imagine if we tell you about a way, an investment opportunity basically, where you can invest low and the risk associated is low, but your returns are great.

This is called a managed forex account. In order for you to understand how a managed forex account can work, here are a couple of benefits you can enjoy with managed forex trading.

Return generating

The biggest reason why investments are made, is in order to have a return on those investments in the form of profits. There is no secret about the fact that when investments are done right, with the right opportunity, they can bring you a lot of profit. However, you have to be careful how you invest.

A managed forex account is a splendid opportunity for investing your money. Opening a managed forex account with a low investment of about $5,000 can generate a profit of about 10-20 percent per month.

If you wish to have more returns you should consider investing more, and you will be surprised for returns that can fall anywhere between 70-100 percent.

Profit making made flexible

The way a managed forex account is handled is not necessarily only in one direction. These accounts are flexible. Whether the market is bullish or bearish does not really matter, as a well-managed forex account will be able to generate a profit.

Source of passive income

Many have become successful forex traders, but not without a lot of failure along the way. As an inexperienced forex trader, you may lose all or a major fraction of your investment in a highly volatile market.

A managed forex account can help you not fall into this trap. You just need to open a managed forex account with a company that is reputable, and you are ready to start making money.

The other way out would be to trade on your own, but for that you obviously need knowledge on the subject, plus a lot of experience, otherwise you might fail.

With no proper knowledge you will lose your investment one way or the other. So, why would you want to take that risk?

Diversified

As mentioned before, trading forex on your own involves a lot of risk. This risk can be decreased significantly, to a level that is acceptable, when it is placed in the hands of a company that can manage the account.

Since forex trading involves a lot of risk, a good company will ensure that it has risk control measures put in place, and as such they will most probably have drop down limits put in place as well.

A good company will ensure that they do not risk more than 2-3 percent of a client’s total investment in one trade.

The percentage risked can be slightly higher with bigger investment accounts. As an example, if you have opened a managed forex account with a company that offers a 35% dropdown limit, then your account will stop taking trades when this limit is reached. This is also called balance protection.

Controllable

As a trader you might have second thoughts about the security of your trading account. Who has access to it, and what might they do with your funds? Also, you might be scared that your login details might be compromised.

There is nothing to fear, as you still retain complete control over your account. Those who manage your account are only able to use the funds already in your trading account to trade.

They will not be able to withdraw funds. All control over the account rests solely with you. If you suspect any foul play, you can easily withdraw your money or close the account.

No manipulation

Unlike stocks and the futures market, which are quite susceptible to being manipulated, forex is considered quite contrary. Although forex is an exchange which is highly centralized and can therefore be easily manipulated by bigger entities and key players, it has a decentralized market which is very difficult to manipulate.

Liquidity is high

The liquidity of managed forex trading accounts is very high, and therefore these types of accounts are valued all around the world. Investments are easily attainable and can be withdrawn whenever so desired.

This is unlike investments like leasing out property or investing in a business venture where the waiting period is longer.

Leverage

Leverage is best explained as the ratio at which a broker allows a trader to take advantage of the broker’s resources. As an example, say for instance you open an account with a broker and invest $600.

If the broker offers a leverage of 1:100, this merely means that you can trade for up to $60,000. Trading with leverage allows you to make even more profit.

However, there is another side to trading with leverage. It is unsafe, as high leverage can make you lose all of your investment.

24/7 Trading

Forex trading does not stop, it runs 24/7, except for Friday nights till Sunday nights. The trading sessions from London, New York, Sydney and Tokyo, at times run parallel to each other and at times following each other. Therefore, you can trade forex all throughout the day.

Our exclusive guide: How to choose the right managed forex accounts?

As a forex investor you have to understand the market before you become a trader. You can also just actively participate in the market in order to make gains, but it could take you months or even years to come up with a profitable trading strategy.

We would like to introduce you to only the best managed forex accounts companies there are, offering high returns on your investment monthly with minimum risk. We only try to find firms which are authorized by the FCA (Financial Conduct Authority) of Britain. As part of the FCA, they follow price action trading strategies which are regarded as the holy grail in forex trading.

How does a managed  forex account works?

If you are authoritative and controlling, then managed forex accounts are not for you, as you would not allow anyone to fully manage your investment.

What you also should keep in mind is that the fees associated with managed forex accounts are quite high, in comparison with normal forex trading accounts. Moreover, you will need to fulfil the required minimum deposit amount.

A managed forex account differs entirely from an equity trading account and a conventional bond, as can be seen from their interface. A money manager will be in control of the account, but as previously said, there is no need to worry, as the account still remain under the control of the trader.

The money manager will not be able to withdraw any funds without the permission of the investor. What the money manager should do however, is inform the investor that they may lose money due to the volatility of the forex market.

As such the managed forex account providing company should furnish the investor with a disclaimer, before starting any trades.

It is important that an investor guides their money manager about their favourite trading plans and strategies before starting to trade. This is very important, as it will filter out possible mistakes.

Investors should also remember to not give full control of their account to money managers, but should only give them trading control, as this will remove the investor out of the trading of the investment.

Not being involved in the trading of their funds will remove any psychological or emotional problems arising, due to losing or gaining while trading forex.

A company that manages forex accounts, must also ensure that they have enough training staff, to guide investors while they manage their investment account.

At times managed forex accounts companies might charge penalties for early withdrawal of funds.

Who is the right person for a managed forex account?

This type of account is not good for you if you struggle with a controlling or dictatorial personality. However, this type of account is perfect for risk takers, who are patient enough and allow others to manage their accounts on their behalf.

Therefore, a managed forex account company normally screens possible clients, to determine their level of risk tolerance, prior to commencing with trading.

Who should consider opening a managed forex account

A managed forex account is ideal for the following types of people:

You are too busy

Many are too busy going about their own lives and have busy schedules and routines. Thus, they do not have the time or the experience to trade the forex market. Family and career obligations can distract in a field where complete focus is needed. Having a managed forex account helps and allows you to pursue other activities.

Okay with others trading for you

If you are an experienced forex trader, then you must know about the struggles traders and investors have to go through. Apart from that, the volatility that accompanies currency pairs, can be disheartening. Therefore, as an investor you should know about the limitations of forex accounts, as they do not always guarantee you profit every time.

Don’t have the guts of a trader

Do you lack the psychological personality of a trader? Forex trading is not really the place for a person who lacks foresight or does not admit mistakes they have made.

This quality in personality is very important as the volatility of the forex market can wipe clean an investment in a few minutes. Trading does take its toll financially, mentally, and physically.

Who should NOT consider opening a managed forex account

A managed forex account is not ideal for the following types of people:

You are a control freak and want total control over trading account

An experienced forex trader wants to be in total control of their own account therefore managed forex accounts might not be a good option for them.

You do not have enough funds

The normal minimum amount that is required to manage a forex account usually starts at $2,000. If the account has to be solely managed, then the deposit starts at $10,000. These high amounts could discourage many traders to opt for a manged account.

If a person does not like to be vetted

Some people do not like to go through a process where they must be vetted for a managed forex account. This process requires a bit of research and involves paperwork for the managed account. It also requires the signing of a LPOA (Limited Power of Attorney Agreement).

The LPOA is a legal agreement or document that stipulates the authorization of your trading account to your account manager. There is always a chance that your money could get lost or that you could make a profit with a managed forex account.

However, much also depends on the money manager, on the market activities and the risk levels, plus many other factors that play a huge role in determining.

Basics of a managed forex account

A quality company that offers the services of managing a forex account will always offer a consistent level of profitability to its client.

How to calculate maximum draw-down of a forex account

Here is how the maximum drawdown of a forex account is calculated.

(Equity high net value – Equity low net value)/Equity high net value

Let us take a look at an example of a maximum drawdown. Say for instance you start out your trading account with $16,000, and then it increases to $30,000. Afterwards it decreases to $7,000, then up to $35,000, then down to $5,000, and lastly up again to $40,000.

The equity high net value will be $40,000 and the equity low net value will be $5,000. Thus, your maximum drawdown will be calculated as:

($40,000 – $5,000)/$40,000 = 88%

This maximum drawdown is very high and shows risky investment. It also shows a Greta swing in the investor’s account. Calculating the maximum lower drawdown value enables you to know the minimum risk than can be taken.

As such an investor should make use of the services of a managed forex account provider for at least 3 to 5 years, in order to effectively determine the maximum drawdown of a managed forex account.

A Well Regulated Broker

In order to find a good broker for your managed account, find an account manager you’d be happy to work with and enquire from them which broker they prefer, especially one that is well-regulated. First, analyse the broker before trading with them. Verify the broker’s experience and qualifications.

What is also important is obtaining an overview of the account management agreement, as it shows how the trading life of the investor can be affected in future. Other things to check are the pass account statement and the manager’s prospectus. The prospectus should include contact details of the manager and extensive background of the company.

Take a good look at risk levels, the profit-sharing ratio, minimum deposits, and the drawdown policies of different managed forex account of the company.

Conclusion

Forex has the potential to bring you great profits and make you wealthy in a short amount of time, but because of its volatility, those who are inexperienced can lose a lot of money in the process or otherwise struggle a great deal.

Our suggestion is that you open one of managed forex accounts, but also learn along the way. Just to keep in mind though that managed forex accounts do not come cheap. These fees may be in the range of 40 to 50 percent of the profits made.

Apart from those commission fees, some managed forex accounts companies also charge extra for things such as manager and brokerage services that they might be offering you.