Forex Managed Accounts Explained

July 19th, 2009

Forex managed accounts allow anyone the opportunity to enter the lucrative currency trading markets without having to do the trading themselves. A managed account means you do not have to do the trading yourself. The management company will act for you.

There are two basic types of forex managed accounts.

1. Forex Standard accounts

Standard managed accounts place your money into your own account, in your name, and a manager will be able to oversee it and trade with the funds. You will be able to always view your account, see how much is there, and how it is doing. It will be your money still.

Remember that you will takes losses at times, no one can predict the market right every time. The broker is there to make you a profit, and chances are they will.

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2. Managed Pooled Forex Accounts

Pooled accounts inherit some risk of fraud. You will have you rmoney placed into a pooled account, along with other traders, and managed by the broker. You are paid a share of their declared profits.

The theory behind pooled accounts is that your profit and loss will be spread evenly and results more stable then in with a standard account. It is a concern that you may not know what is occurring, and a management company could be making small payments to fool you and stealing your funds.

Be wary of any forex account manager that guarantees a certain percentage of return. Know that there are no guarantees in forex trading, and you should avoid any company that guarantees a certain percentage return.

It is wise to be careful, but know that there are honest pooled accounts out there that carry with them the benefit of predictability. However, you should research a company offering pooled accounts even more thoroughly than usual before you decide to invest.

Whether you choose a standard or pooled account, you need to shop around. Move on to the next if a manager insists that you sign up with a specific broker. This can be a concern because they will have the incentive to make many small trades regardless of profit just to up the broker’s own earnings. You undoubtedly will not get the cheapest broker that way. It is better to sign up with a company who will let you choose your own broker for forex managed accounts, even if they charge a slightly higher fee.

It would also be wise to look into automated forex trading software.  Automated forex trading robots can take the emotion out of  forex trading and increase your chance at success.

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