Wherever there is money there is someone who is looking to capitalize on the gains to be had from trading that cash. The Forex markets are an obvious choice in this respect. With the FX markets being so easily accessible to retail investors these days, we wanted to find out whether or not those who are looking to make money from making money are actually worth the time and effort.
We are of course talking about managed Forex accounts. These are accounts which you set up and place your capital in to and then let someone else take over from there.
A “professional” trader is able to place trades on your behalf through your account, and in doing so take a commission of any profits which might be made in that month. Essentially, they are not using any of their own money to trade, but are instead using your money mixed with their ideas in order to hopefully generate a profit for the two of you.
The Positives of Managed Forex Accounts
Obviously, if all goes to plan, having a managed Forex account can be a great thing. The profits can be significant, and the ease of trading can be unsurpassed. Here are some of the positive things which immediately shot to mind when we were thinking about managed Forex Accounts:
- You don’t need to learn how to trade FX yourself to participate
- You have full access to deposit and withdraw funds at any time and the account manager has no ability to do this
- A small performance fee is often affordable (if you choose a managed account with a low percentage commission)
- Time saving and potentially very profitable in the long run
Each of these can be huge benefits which might be missing from individual Forex trading that you could be doing yourself.
However, with all good things come downsides, and before we continue – it would pay to look at these right now.
Downsides to Managed Forex Accounts
Unfortunately, if you choose the wrong managed Forex account, there can be a few things which go wrong. Firstly, and possibly the most damaging thing that could happen is that you choose an unreliable managed FX fund.
If you do this, chances are that the trader has about as much experience in the FX markets as a novice. Hence, when they do eventually execute trades on your account, the likelihood of those trades making losses is high. How can someone expect to be able to trade other people’s money when they are unable to make a profit from trading their own?
You need to look in to this very carefully. Obviously, there are a vast number of Forex managed funds out there to choose from. Yes, they are worth the Try while if you have an extra $1000 to $2000 to invest and which you can afford to lose at someone else’s mercy. However, the key is to do your homework and choose the best possible fund at any one time.