Forex managed accounts are used by traders who want to exploit one of the most dynamic financial markets in the world. This type of account allows professional Forex traders to make trading decisions on behalf of investors. This means even the average trader with no experience in Forex trading can use the expertise of professional traders to benefit from Forex trading.
Function of Forex Managed Accounts
The operation of managed Forex accounts is the same as that of traditional mutual funds. Investors put their money in the care of a management company, which assigns a professional trader to be in charge of the money. Professional Forex traders watch the market and make investment decisions to exploit trading opportunities.
In some cases, money from each trader is placed in a separate account and designed to take the same trade as the investor. In other instances, the money is placed in a common pool.
Advantages of Forex Managed Accounts
One of the significant benefits of Forex managed accounts is that they allow investors to make profits in a very lucrative market without having to learn the ropes of the trade. The operation of the Forex market is a bit complicated for the average trader to make many gains from it.
Managed Forex accounts allow investors to use the experience and expertise of professional traders who already know the basics. Another important advantage of this account is that traders do not have to sit in front of their computers to make money. Investors make money anytime professional traders work.
Risks
Although managed Forex accounts can yield substantial returns, they can also be a risky investment strategy. When investors use managed Forex accounts, they utilize large amounts of leverage. This is meant to increase the potential for making greater profits, but it can also lead to losses.
Investors who use managed Forex accounts should be ready to lose all or some of their investments as this may happen at some point. This means Forex managed accounts are suitable for investments that traders can afford to lose.
Reputation
The success of a managed Forex account is largely dependent on the trader in charge. It is important for investors to choose traders with good reputation in the industry. Investors should be careful when choosing traders.
Some traders try to sell managed Forex accounts even though they do not have the experience needed to navigate the markets. Success in managed Forex accounts is pegged on the ability of an investor to find a professional trader with a record of accomplishment.
Cost
To use managed Forex accounts, investors are required to pay certain fees. Most of the accounts are designed to keep a portion of profits made from trading. This arrangement works to the benefit of the investor.
The payment arrangement means traders do not make money unless they are successful in the market. The amount of profits retained can be large. In some cases, traders keep 30 percent or more of profits.
