5 Essential Elements To Take Into Consideration When Investing In Managed Forex Accounts

In choosing potential forex investment opportunities there are lots of points to consider. Listed here are five things you need to consider and keep uppermost in your mind as a potential investor in managed forex products. This isn’t intended to be a complete list but is only a basis from which to build a successful Managed Forex portfolio. In the end it is up to the individual to do their own due diligence and not simply depend on the advice of other third parties.

1) Do You Have Complete Control of Your Funds?

Absolutely the most significant factor to weigh when evaluating managed account options is ensure you always have control over your funds all the time. If you are dealing with a reputable Forex Broker, and this should always be the case, you should not have too much to worry about in this respect. Further down we cover more on this aspect. If you avoid any type of pooled fund arrangement and use a LPOA or “Limited Power of Attorney” you should then be able to revoke the right of the trader to trade the account should the unthinkable eventuate. Best to be safe than sorry.

2) Historical Performance

Obviously there’s a huge advantage in being able to see a managed forex account traders historical performance figures. They also need to be verifiable figures, in the form of original statements. A spreadsheet of numbers or a table on a website doesn’t constitute verifiable figures, regardless of what the trader or company does to try and back up their claimed performance figures.

3) Money Management

When it is all said and done all you really have to go off with regards to deciding on a managed forex provider is their history. Their history needs to be verifiable, that is audited or displayed as original statements with known authenticity. Don’t settle for a table on a web site or a number of Excel spreadsheets, these just can’t be verified as authentic. If the provider cannot present you with verifiable documentation to validate their performance claims you must assume that their figures are bogus.

4) The Broker

Another important fact to take into consideration when selecting a managed trading account is which broker they use to execute their trades. Do they offer tight spreads and fair trade execution and do they process deposit and withdrawal requests in due time? A bad broker can really ruin your whole managed account experience. Often I’ve had to cope with brokers who take weeks to process your withdrawal requests and can also take weeks to place your funds into trade. This can end up costing you thousands and months of wasted opportunities. It is sometimes bureaucratic incompetence while in other cases it may well be something more sinister, all the same it is best to study up on prospective brokers and see if they have a good bad or indifferent reputation amongst other traders.

5) Draw Down

Something that traders dread, but invariably have to deal with is draw down. What constitutes an acceptable level of draw down, and what is utterly dangerous to the safety of your trading account? Personally I set the figure at approximately 25-30%, others prefer a more conservative 15% whilst others can deal with 50%. For me 50% is simply to much and hard to get over. You basically must then double your account just to recover your original amount. A difficult feat to achieve. Whatever amount you select stick to it and don’t attempt to trade out of an impossible situation. That is simply gambling not trading.

In conclusion follow these 5 points and do your own due diligence on any prospective investments you look at. Every success to you with your trading.