Managed Forex – A Brief Discussion

There are a couple of ways to earn money in the forex markets. You can trade an account yourself or you can set up a managed account. By 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 professional trader to manage your money for you.

Managed Accounts

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

Auto Trading

In another kind of managed forex called auto trading, a professional forex trader links his account with yours by using a software program and his trades are automatically placed in your account. Using this service you have to pay monthly instead of a percentage of profits. The service is newer and therefore the track records are often only a few months old.

Expert Advisers

A forex expert adviser is a set of rules which have been programmed into the MetaTrader 4 software program. It’ll automatically execute trades in your account 24 / 7. The long-term track record for this type of managed account is not the best.

Hedge Funds

When you have sufficient funds, you are able to join a forex hedge fund. However, you’ll need to either have an income of $200,000 for the past two years or a net worth of $1 million to do so. This is an investment vehicle only for those people who are already fairly wealthy. Like other sorts of managed funds, the fees depend on performance and the industry standard is 20 percent, even though some managers will charge as much as 50 percent.

Risk

As with every investment vehicle that will require you to hand over your money to someone else, 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 then there is always a likelihood of loss.