What Exactly is Managed Forex?

There are a few approaches to make money in the forex markets. You could trade an account yourself or you can set up a managed account. Using a managed account means that you will use a robot to make your decisions for you or you will hand your funds over to a seasoned trader to manage your funds for you.

Managed Accounts

In a managed forex account, you give your funds to a professional investor and he manages it for you. In turn, he will take a management fee, that is usually between 10 and 20 percent of the profits. If you don’t know how to trade yourself this can have its advantages as you will not have to spend endless hours analyzing the markets. The returns on managed accounts can vary widely. Some funds will average 20 % per year or maybe more, some will be lucky to generate 10 percent per year, while some will lose money. Most managed accounts seek participants with at least $5,000 to invest. Get a manager with at the least a five-year track record.

Auto Trading

In another form of managed forex called auto trading, an established forex trader links his account with yours using a software program and his trades are automatically placed in your account. Using this type of service you pay monthly as opposed to a percentage of profits. The service is newer and so the track records are usually only several months old.

Expert Advisers

A forex expert adviser is a set of rules that have been programmed into the MT 4 software program. It will automatically execute trades in your account 24 hours a day. The long-term track record for this type of managed account is not the best.

Hedge Funds

If you’ve got sufficient funds, you could join a forex hedge fund. However, you will need to either have an income of $200,000 for the past two years or a net worth of $1 million to do so. It is really an investment vehicle only for individuals who are already fairly wealthy. Like other types of managed funds, the fees derive from the performance and the industry standard is 20 %, although some managers will charge as much as 50 %.

Risk

Just like any investment vehicle that requires you to hand over your money to another person, there is a risk that they’ll either lose it or run away with it. When investing in a hedge fund or managed fund, do your due diligence. Forex is a fast-paced market and there is always a risk of loss.