Forex Money Manager

If you are a forex trader, then you should definitely consider investing in a managed forex account. Today, trading in the foreign currency market isn’t what it used to be like, ie a gentleman’s club, limited to the exclusive few, where everyone at the table made money, and left happy. This article examines how the forex market has changed rapidly in recent years, and that profiting from investing in this market on an individual basis is extremely hard.

I remember a friend telling me a story about the wild west days of the forex market, back in the early and mid 90′s, before currency trading became such a fashionable and in vogue past time. In those days, it was extremely easy to make money from the forex market.  There were many tricks you could use to fool the brokers, and it was just not neccessary to invest part of your portfolio in a managed forex account, as there was plenty of money to be had from the brokers themselves.

There used to many ways of fooling the broker, and making money from trading forex, so it was just not necessary to invest in a managed forex account.  One method which was used was to place a buy trade and a sell trade either side of the current price, just before a big news announcement.  In those days, news announcements created big price movements, and it was an easy trade to make upwards of 100 pips with a big news event such as interest rates, unemployment figures etc.

And this was another aspect about the forex market ten years ago which is different than today.  There is not so much volatility in the market than there was back then.  Back in the day, everyone was making money – if your average managed forex account was making returns of 20% or 30% per month, then even the average trader could still make 10 a month on his personal forex trading account, just by using moderate levels of leverage.

So how are things so different today? Well, there are literally millions of retail players, people who have a couple of thousand dollars to play with, and who think they are the next George Soros, and believe that investing in a managed forex account is a waste of time and money.  This is coupled with the extraordinary levels of leverage that the forex brokers are offering their clients to trade with.

More and more forex brokers are opening up for business as it is a very profitable activity for them.  The average spread for a single lot traded of GBP/USD is 4 pips.  So if the broker is getting a price of 1 pip wholesale, he is making 3 pips on each trade, from each trader who opens an account – think about it – that’s $30 for each single trade! Now it becomes clear why so many brokers ares opening up for business each and every day!

To conclude, forex trading today is a very hazardous activity, and not so easy as the brokers want you to believe. Of course, it is very much in the interest of forex brokers to promote high leverage, adn to offer free training courses, in an attempt to lure people into thinking it is easy to make money in the currency market. But unfortunately this is a fallacy, and investors would be much better off investing in a managed forex account.

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.