Should You Utilize Managed Forex Trading

By June Campbell

Anyone involved in Forex trading will sooner or later encounter the term "managed Forex trading."

Forex trading involves investing and trading in foreign currencies. Forex is the largest currency market in the world. Traders participate in much the same way as those engaged in trading in the stock market or in commodities.

Managed Forex trading is an arrangement in which you invest in the Forex market, but instead of doing this personally, you leave your account in the hands of a professional In most cases, this professional handles the decision making as well as the actual buying and selling. You pay the professional a fee for his or her service.

Is Managed Forex Trading the Right Choice for you?

Potential investors may question the concept of using a manager. Is managed Forex trading something you should pursue? Can paying an expert to do your investing for you produce the financial results you want? Is it smart to allow someone else to take control of your investment decisions?

Advantages to a Managed Service

In some cases, using a managed service makes good sense. For example, certain people can't or won't devote the time necessary to learn the ins and outs of Forex trading. This usually requires several months of learning, in addition to keeping current regarding global macroeconomic events. They typically devote some resources to a good Forex trading course.

These people recognize various advantages to investing in the Forex market. They may, for example, want to diversify their portfolio, or to acquire tax credits, or perhaps they simply want to generate revenue. To them, it is worth paying a fee to have someone else do the investment tasks on their behalf.

Cost of a Managed Service

Anyone using a managed service will be required to pay a fee to the company or individual. There are a great many companies offering this service, and rates and fee structures will differ from one to the other.

For example, some management services will levy a fee regardless of whether or not their investments make you a profit. With others, they will charge you a percentage of the profits they make for you. The percentage is likely to be somewhere between twenty and thirty percent.

Doing Due Diligence

When engaging the services of a Forex management professional, do not fail to practice due diligence. Expect the company in question to demonstrate their history of results versus standard comparison indices (i.e. the stock market).

When you receive this data, analyze it closely. Unless you are highly skilled at this task, you might want to visit one of the comparison sites whose performance tracking is audited by an independent third party. An independent audit gives you greater assurance regarding the validity of the data comparisons.

Are you Psychologically Suited to a Managed Account?

Your personality determines whether a managed Forex account a good choice for you or a bad choice. Whether or not you are suited for a managed account depends on how readily and easily you can turn control over to someone else. If you enjoy and prefer managing the details of your life, then a managed Forex account is not in your best interests.

If you are the sort of person who wants ongoing involvement in your affairs, you will have difficulty sitting back and turning over the reigns. For example, if you read some interesting investment information in your business newspaper, would you want to call up the management company and tell them how to respond to this information? If yes, managed Forex trading is not a suitable solution for you.

People who are comfortable using a managed service can turn over the account to another and have no interest in directing or interfering with the process. They are content to let the professionals manage the account according to their own strategies and preferences.

Investment Necessary to Start with a Managed Service

Managed Forex accounts are not appropriate for the small investor. A typical startup investment could range from twenty thousand dollars to fifty thousand dollars. Managed accounts are intended for high net work individuals with substantial assets.

Anyone approaching a managed service with less than ten thousand to invest can expect to be directed elsewhere.

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