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CO17 - Introduction to Forex Managed Accounts

"Forex managed accounts are a type of service that allows you to invest money with a forex manager. The forex fund manager in turn uses the investor’s capital to trade on their behalf. Of course, for providing this service, the forex fund manager takes a fee. For investors who do not have the time or the knowledge to actively trade the forex markets, a forex managed account service might seem the best option. But there are a lot of scams that one should be aware about. In this article, we give you the lowdown about how forex managed accounts works. We also point you on the right direction so that you avoid being scammed. There could be many reasons why one would choose a forex managed account service. But the important factor is that you trust your investment in capable hands that offers realistic returns. Learn more about forex managed account services and how you can use this as an alternative to trading forex by yourself."

Forex managed accounts is something that traders might have come across at some point in time. Usually beginners in forex tend to explore the option of using a forex managed account service. There could be different reasons, but for the most part, using a forex managed account is seen as an easy way out.

Some, due to their busy lifestyle or for the lack of diversity tend to opt for a forex managed account service. As the name suggests, a forex managed account service is one that allows you to invest money with a forex money manager.

The forex money manager basically pools money from multiple investors and trades on the investor’s behalf. Due to the higher capital that is created, there is a good chance that traders can expect to see some decent returns.

Typically, in order to be someone to manage an investor’s capital, they need to be certified. But due to the over the counter nature of the forex markets, you will find a lot of legitimate and illegitimate forex managed account services.

One of the biggest market hypes that forex managed account services use it to bloat their performances. Greed is a natural part of the financial markets. Investors are typically drawn into forex funds that offer higher returns.

But there is a downside to this. With higher returns comes higher risk. There is a really good chance that investors could lose all their invested capital. Many forex managed services operate in an online space. Thus, there is no real physical office and seldom are the forex managed account services audited.

This leads to a lot of scam in the markets. In fact, if you look around, you will find quite a few traders complaining at forums on how they were cheated out of their money. But the blame of course lies on the investors as well.

Greed tends to mask logical reasoning and investors end up pooling their funds with a forex managed service that promises them big returns.

Data shows that even in the U.S. which is heavily regulated, many hedge funds fall short of even beating the S&P500 index. Thus, you can expect the kind of real performance that you will see with a forex managed account service.

Having said that, there are quite a few legitimate forex managed account services. Let’s look at some of the most important things to look for when searching for a forex managed accounts service.

What to look for in a legitimate forex managed accounts service?

The first thing of course it legitimacy. Always check with the forex managed account service on where they are located. Having a physical office offers some level of assurance compared to someone merely opening a webpage and offering such services.

The next step is to check whether the business is legitimate. You could simply ask the potential forex managed accounts to service to provide proof of business operations. Having a legitimate business means gives traders a better level of assurance on the operations.

It also helps to know a bit about the fund manager in the question. Asking these questions and depending on whether the firm will provide with the details can be the first step to eliminate and risk of a scam.

A legitimate forex managed account service will no doubt be willing to share the information with you. Of course, the downside with dealing with a legitimate forex managed service is that the amount of investment can be higher.

Many traders think that investing just $500 or $1000 with a forex managed account service will make them rich. But if you look at it logically, even with a 8% annual return and compounding the returns, it would take about 9 years to double your investment.

The lack of this basic knowledge leads many traders to fall prey to the many online scams.

Another factor that will help to find a legitimate forex managed account service is to look for the yearly performance going back a few years. The longer the forex managed account service is in business, the better your ability to gauge the returns.

But having said that, remember that past performance in no way can guarantee future profits. Therefore, there is always an element of risk.

There can be a number of reasons why one would want to look for a forex managed account service. Regardless of the reasons behind it, remember that you are trusting your money in the hands of a third-party.

Therefore it always pays to approach this with a sense of caution rather than letting greed rule your decisions.

Read 980 times Last modified on Monday, 08 July 2019 09:24