Managed Forex Accounts: What You Should Know And What You Can Expect

If you decide to participate in forex trading, it is not a requirement that
you hire a broker to handle your account. Forex trading can actually be a
one-man enterprise and if you study the industry well and learn the ropes, you
can actually manage your own account without anybody else's help. However, if
you don't have the time or are not very confident about your decisions, a
managed forex account may be a good way to handle your investment efficiently.

What is a managed forex account?

A managed forex account is essentially a forex account that is handled by a
company or through a representative. This can be an excellent solution for an
investor who either has no time to watch how the market behaves or someone who
is very inexperienced but would like to invest in forex training.

What does the management company do?

In a managed forex account, the company you hire will handle your account for
you. They will be watching the activities of the market on a continuous basis in
order to determine the trends and then recommend which currency exchanges show
promising activities. Once they have informed you what the trends are, it is up
to you to make the final decision where to invest.

How to pick the right management company

Remember that with a managed forex account, somebody else is watching the market
for you. How they see the market will be the main basis of any investment
decision you will make. It's like wanting to watch the fireworks but instead,
asking someone to describe it for you.

To avoid losing a lot of money (and swearing off forex trading forever), hire a
management company who has years of experience under their belt. Furthermore, go
for the company that has a good and reputable record. If a management company is
notorious for causing their clients to lose money, it's only common sense that
you stay away from them. Work with a management company who is licensed to
perform what they do and only deal with people you can trust and who are
straight and honest with you.

What are the advantages of a managed forex account?

For a beginner trader who cannot put his trust on his own perception and
judgment of the market yet, a managed forex account will be a very convenient
and wise decision, provided he deals only with a reputable company. He can also
rely on the years of experience of that company in order to make sound business
decisions.

Management companies who handle managed forex accounts also have insider
information because they work with many different banks. They have access to
currency exchange rates and market changes that you can use to help you turn a
nice profit.

What are the disadvantages of a managed forex account?

The main turn off about managed forex accounts is that they tend to have higher
amounts of investment requirements. This ranges typically from $10,000 to
$20,000. Those are great figures if your investment is good but they are
terrible odds if you lose. If the management company makes a mistake in trading
or becomes involved in badly timed investments, losing $10,000 can cause a great
deal of headache.

Protecting yourself from the scam of the forex trading world

When you decide to go into forex trading, educate yourself first. Find out how
things work, what to look for in a management company, learn a few essential
information yourself and don't try to use your account manager as your teacher.
You'll be able to decide whether your company's recommendations will make sound
decisions or not.

Find out about the cost of hiring a management company. These companies often
charge a fee and some commission, so make sure you understand how much you'll be
looking at. If somebody tries to slip 'other fees' into your transaction, ask
what and why.

Finally, remember that your management company's role is to manage the account
for you. They should be there to help you make the most of your investment.
Similarly, they should be around if you need them. Find out about the kind of
support they offer and what kind of guarantees you can expect.

Forex trading can be a very exciting and profitable venture but it is only
rewarding if you understand how it works. Furthermore, with forex trading you do
not invest for peanuts. You actually go in to trade and make good money.
However, losing also means you'll also lose a lot. Because the risk is rather
substantial, it is important that if you're considering getting a managed forex
account, you should first educate yourself about its nature, its players and
what makes it work.