Forex Money Manager

Managed forex accounts have been promoted for many years. Even as long as currencies themselves.  The notion of forex managed accounts is not new.  They They are already popular for investors in mutual funds.  In short, they are just investment accounts with lots of benefits.

Virtually all people who open a currency trading account are going to lose money.  But this is to be expected, especially when forex brokers are offering leverage of up to 500:1!

Let’s break this concept of leverage down to the basics, and see how it really works.  A lot of this information will be new to the novice, so read carefully.. What attracts most traders is the lure of big winnings using big leverage – making thousands of dollars each day, or week.  But in reality, it is all an illusion.

I think that many traders have thought about this though.  But reality is, of course, very different, which is most investors give up before they lose their shirts, and open a managed forex account to gain access to a forex investment.  So let’s look at how leverage can cripple a forex trader, and when leverage causes the trader to go bust..  The spreads will cause you a big drawdown, and with a volatile currency, as most are, and you can blow your account in a few short, but expensive, minutes!.

Of course, there are risks inherent in choosing a managed forex account, if you have little knowledge of the currency market – after all, how do you go about selecting a manager in the first place.  Well, of course, appropriate due diligence needs to be carried out, especially with regard to the performance of the managed forex fund, and the forex money manager himself.

Thus to conclude, whilst it may seem quite disheartening to realise that it is nearly impossible to make any money trading forex on online on your own account, you can still benefit from the complex and fascinating world of foreign exchange, by opening a managed currency account. Whilst you can give some credit to these people for trying, it is nearly always more profitable to invest in a properly run managed forex investment.

The popularity of managed forex funds has been phenomenal over the last few years. But this does not come as such a big shock when we analyse the facts.  This article examines the reasons for the incredible rise of managed forex funds.

The rise of managed forex funds started to happen around 5 years ago.  Investors were tired of losing their investment on the stock market, and were researching investment alternatives.  Millions jumped into the real estate market, on the back of soaring prices and cheap loans.  However, when the real estate bubble burst, many people lost everything, and the image of real estate as a safe investment, was tarnished forever.

But the forex funds business had fantastic returns in this period. Whilst the stock markets crashed, the housing market collapsed, and millions of people were losing their jobs, the forex investments were performing very solidly.  This is because there is little or no correlation between the forex market and the stock market..  This basically means that there is no connection to the performance of currencies to the stock market, or to any other investment.

Diversifying your portfolio is crucial to maximizing returns over a long period of time.  Investment experts all agree that a broad, diversified portfolio is vital to weather recessions like we are seeing now.  A managed forex fund can therefore be seen to be a perfect addition to a mixed investment portfolio.

So, having discussed the potential benefits of a managed forex fund, what about the potential pitfalls?  The chief trouble is stay away from managed forex funds run by dishonest wealth managers.  The internet has been a big problem with this – it provides managers with a face to hide behind – all they need is a website to get started these days..  So, therefore, prudent research is first essential..  This includes carrying out an investigation on the investment manager, seeing performance statements, and examining where the manager is based, to ensure that he is genuine, and not a fraud.

So what are the performance figures on managed forex accounts like?  Well, this depends on the type of forex fund which is invested in, on the market conditions, the forex manager himself, and a host of other factors.  The majority of forex funds have a return of between 10% and 60% per year, but this will vary from manager to manager, and also from year to year.

Some managed forex funds have very conservative trading strategies, and will therefore only have returns of maybe 12% or 15% per year.  This may not sound a lot, but if they are not taking big risks, then you do not take a risk to lose all or a lot of you investment.  Of course, you could opt for more risky strategies, where you could double your money – but there is also an inherent risk there aswell. So it is important to find a managed fx fund which suits your appetite for risk.The first, and certainly one of the most important factors which determine the rate of return, is what degree of leverage the manager is using.

It is obvious that the more leverage being used, the higher the risks involved.. It is for this very reason why most forex traders blow up their accounts, as they take too many risks, and when a trade goes against them, they lose all of their money.  Well, this can also happen to managed forex funds. The performance of a managed currency fund is only as good as the manager, and if the manager takes reckless trades, and big risks, then the fund will suffer the same fate.

So, therefore, it can be seen that managed forex funds offer a significant number of benefits as opposed to investing in all other asset classes.  Nevertheless, investors must still have to execute in depth research into the multitude of forex money managers in the marketplace, and what sort of managed forex fund suits them.  We saw that there are a wide array of managed forex funds, and investors differing investment aims. With good quality research, and investor can find the right managed forex fund for them.

Managed forex accounts have become one of the most trendy investments in recent years, with thousands of people opening such accounts every month.  This article discusses the benefits of a forex managed account, and how to chooses the best account for an investor’s particular requests and requirements.

A managed currency account is different to a typical mutual fund, or bond fund in a variety of ways.  To begin with, and perhaps most obvious, is the fact that an investment in forex does not expose onself to the risks of shares, stocks or real estate.  There are a very wide variety of forex investments on the market today.  Some funds invest for the short term, others adopt a ‘buy and hold’ strategy.  Other forex funds may only take positions for the short term, indeed they may be in and out of the market in only a few hours, or occasionally, less than an hour.  We call these latter types of traders day traders, or ‘intra day’ traders.  Very often, these traders will exit trades at the end of the day, so they are not exposed to any risk overnight.

Another unique feature of a managed forex account is that, unlike a mutual fund, an investor has real time, 24/7 access to their account.  This can be seen with several examples.  To begin with, the investor can login to their account online, any time, and see their account balance. These figures cannot be changed by your fund manager, so give a true view of the balance of your account.
Secondly, a managed forex fund is different, as a client can take out his funds from the investment whenever he wants, and there is no withdrawal penalty, or restrictions.  This is unlike a mutual fund, hedge fund, or indeed any other form of collective investment scheme, where there can be very onerous restrictions on much you can withdraw at any one time, or where there are very often penalties involved in such withdrawals.
Another key benefit of managed forex accounts is that the returns have little bearing to the returns of other investments.  Ironically, the recent economic turmoil has seen forex returns increase over the past 2 or 3 years. It can therefore be seen that currencies are a good way to create alpha through diversification. If anything, the recent world financial crisis has presented many profitable trading opportunities, since as volatility around the world increases, this volatility creates many opportunities to profit from the market turmoil.

However, a final point to note is that whilst there are considerable advantages of allocating part of your portfolio in a managed forex  account, one requests to do their due diligence before investing their savings in a forex fund.  There are a lot of fraudulent forex fund managers in the marketplace today, the numbers of which are growing rapidly due to the rise of the internet, and the anonymity it provides.  An investor needs to do his or her research.  To start with, you need to see evidence of the fund performance.

Thus, it can be seen that managed forex accounts offer a number of advantages over regular forms of investment funds.  You need to realise that one requirements to analyse the investment returns of  the different managed forex providers, and conduct strict due diligence to ensure that you will get the returns that you are seeking. With prudent due diligence that an investment in a managed forex account will be a successful one.

Thousands of investors are looking to forex to boost their investment returns..  As a result, there is a growing market for high performing forex money managers who trade through managed forex accounts.  As we will see,  having your investment looked after by a forex money manager offers a variety of possibilities and advantages for the retail investor. This editorial examines why this has been the case, and questions why so many people are now investing with a forex money manager.

So what are the attractions of hiring a forex money manager to look after your money through a managed forex account?  In the first instance, it is the belief that they will make you money.  Is this the case for the majority of money managers?

Well, yes, most forex money managers do make more money than an ordinary retail investor.  It is a fact that most retail traders have blown their accounts within 3 months.  After this period, they either go back to investing in stocks and other asset classes, or look to find a professional to manage their money in the forex market.  Finding a reliable and high performing forex trading manager can sometimes be hard, but it well worth the search.

So how can a managed forex account help you in practice? The first benefit of a managed forex account is that it gives you access to top quality forex money managers, without having to invest hundred of thousands of dollars. Most reputable hedge funds have a minimum investment of $1,000,000.

Another of the key advantages of using a forex manager and a managed forex account is that you have total control over your investment.  What does this mean exactly.  The key to this, is that you open an account with the relevant currency brokerage, and at no point do you need to send money across to the fund manager.  This means that the manager will have no access to your money.

Of course, the manager will get access to trade your funds and you can begin your online forex investing experience.  This is set out in a power of attorney which you are required to execute, and return to the broker.  What this says, in effect, is that you have granted permission to the manager to take trades on your account, and to give him full trading privileges.  It does not, however, give him any other rights over you account, such as to make transfers or withdrawals of funds.

These different levels of security are a key reason why managed forex accounts have become so popular in recent years.  In the past few years, there have been several cases of hedge funds defrauding their clients of millions of dollars.  Perhaps the biggest case reported in the press was that of Bernie Madoff.

A further comfort in terms of safety of funds for investors is that your funds will be held by a properly regulated forex broker.  All regulated brokers need to deposit a capital amount with the government regulator, and to comply with strict regulations in order to be able to conduct forex broking business.  In addition, most countries will offer some form of deposit protection to the investor, so that in the event of the broker going bankrupt, the investor’s funds will be guaranteed by the government where the broker is based.