Forex managed accounts are investment funds that are connected to the forex (foreign exchange) markets. The differentiation between forex managed funds and normal accounts is that expert traders and companies that offer brokerage services that focus on the foreign exchange markets, administer and run a forex managed fund.
Forex managed accounts are typically for people that don’t have the aspiration or the time to trade and manage their own trading accounts. However, they still want to develop their portfolios with other investments. These managed funds are a superb way for any individual or group to gain access to the foreign exchange market regardless of their status, level of education or if they have no spare time because all of the management and trading is handled by professionals.
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The services that the fund managers provide do cost the investor. Nothing is free obviously but the profits that they can deliver can potentially be enormous and therefore they outweigh the cost by far.
The costs come in two basic forms. First of all there is the management fee which is a set amount usually to start up the account. This is for the administration costs that come with the account start-up. The thing is, not all account managers charge a management fee so this is something to look out for.
The other costs are the performance fees. All managed forex accounts charge these fees. They are a percentage of the profits that an account accrues. They can vary a great deal. Some will take a mere 10% performance fee whilst others can charge up to 50% performance fees. These fees are based on a high water mark. This means that only when the account balance goes over the previous high balance are fees charged. So if the account goes into drawdown and then increases again, no performance fees are charged until the account reaches the previous high balance.
There are quite a few benefits from owning a managed forex account. The first is that you don’t have to spend hours in front of a monitor waiting for signals for you to enter the trade. All of the hassle is undertaken by the fund managers. This has the benefit of leaving you with time on your hands while professional traders increase your account balance.
The second major advantage is that the accounts are very flexible. You can add or withdraw funds whenever you desire. You can withdraw cash at any time as part of a monthly cash flow, for example. You can stop the account from trading whenever you want and you can also view the trades in real time, at any time with a view only trading platform.
To choose a managed account, you will need to undertake plenty of due diligence. Top traders will offer at least two years of trading statements showing all of their transactions. They should be totally transparent and should answer all of your questions thoroughly. If you feel they are hiding something or feel something is not right, do not follow through with them. There are many rogue traders out there so you really should do your homework.
Looking on the brighter side, if an account is chosen wisely, the fund can give your portfolio a massive boost. It is best to put in the minimum amount to begin with and go from there. You can pull out your initial investment when you can in order to protect your capital. Everything from then on is pure profit.
Forex Managed Funds 