Should you invest in a Managed Forex Account?

18 Dec Should you invest in a Managed Forex Account?

As an aspiring or struggling forex trader, it is important to consider your options and understand how to make your mark within the financial markets. As one of the most volatile and hostile financial environments in the world, the foreign exchange is renowned for the challenge that it provides to traders. This is particularly true in the current climate, where controversy surrounding the banks role in rigging the forex market continues to rumble.

One way in which traders can improve their chances of success is to appraise the wide range of potential account options. With everything from demo to self-traded accounts made available through online brokerage firms, the choice that you make can have a significant impact on the financial returns that you secure.

Investing in a Managed Account: Is it Right for you?

If you are an inexperienced or unsuccessful financial market trader, however, you may decide to invest capital into a managed forex account. With this type of trading account, you employ a reputable money manager to execute trades on your behalf and offer a fee in exchange for their services. The fee can be either fixed or commission based, and managers will work in a similar way to investment or financial advisors. Before you consider committing to such an account option, however, you would do well to consider the following options: –

  • Striking the Balance between Achievement and Control: In theory, employing a professional forex account manager is the first step towards maximising your investment. This demands that you relinquish a certain amount of control, however, as you must place faith in your manager and allow them to assume responsibility for executing individual trades. You therefore need to appraise your level of inexperience or previous performance as a forex trader, and use this to determine whether or not employing a manager will boost or diminish your profitability. With the global economy currently declining and triggering a rise in demand for assets such as gold, managed accounts may well offer added value for money.
  • Your Long Term Trading Goals: While hiring a forex account manager can be the catalyst to short term financial success, it also prevents you from gaining genuine experience within a real time, market environment. Even though you can continue to learn the theories and fundamental principles of forex trading while an account manager generates profit on your behalf, this does not replicate the experience that can be gained by executing genuine transactions. If you intend to trade forex on a professional or long term basis, however, then you will need to utilise the service of an account manager responsibly and develop a viable plan of action.
  • The Cost of Performance and Management Fees: The whole purpose of hiring a forex account manager is to maximise your profit, and this can only be achieved if you balance your potential earnings alongside the cost of performance and management fees. While this risk is less pronounced if you reward your employee on a commission based premise, the majority of managers are likely to command a fixed fee as a matter of course. If you have incurred previous failure in the forex market, however, then the key is to seek out the very best professionals to ensure that your investment is rewarded.
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