Managed forex trading can be an attractive option if you want to make money from the lucrative currency trading market but do not have the time or inclination to learn to trade for yourself. With managed forex accounts, somebody else will trade for you.
Of course you will pay commission in some form, but an experienced forex trader is likely to make a lot more money than a raw beginner, so it can still be very profitable. In addition, you do not have to spend hours every day looking at charts and analyzing currency prices on the internet.
Managed Forex Trading Risks
But is it really so easy? What are the risks involved in managed forex trading?
First, it is important to understand that all speculative trading is risky, whether it is in stocks, currencies, commodities or anything else. Nobody makes money on every trade, and that includes the most successful professional traders. So there is a risk that your manager will make losses on your behalf. However, it is true that their results are likely to be better than yours in the medium to long term, even if there are times when things do not go so well.
Second, be aware that for a standard forex managed account the minimum investment can be high. This is because a trader is normally trading your account for you on a commission basis.
Clearly, the more money you have in the account, the bigger the expected returns and the more commission he can expect to make. You can see that it would not be worth his time to deal with an account balance of a couple of thousand dollars.
Standard Managed Forex Trading Account
However, there is another option. In the case of a standard managed forex account, your money is held in a separate account that you can view and have access to. But there is another way of investing in managed forex trading which is called a pooled account.
Here your money goes into a pool with other clients’ funds, to be traded all together. In this situation it does not matter how much your individual funds are and the company will usually accept small investments.
There is more of a risk with pooled accounts in that you cannot see what is happening. You have to trust that the funds are being held safely and the results are accurate. It is very important to check up on the background of the company and particularly, whether they are members of any regulatory bodies that will protect you in the event of a failure or crash. There is a real risk of scams with unregulated managed forex trading, so do your