Forex Managed Accounts
Posted on February 7th, 2009 by Tom Flora under Forex Managed Accounts.
Why you might consider looking into Forex Managed Accounts
Trading can be fun and interesting, but it is also time consuming. Also, if you have a tough time controlling your emotions, then you may not make enough good rational trading decisions. Self trading is not for everyone. If you fall into this category then think about forex managed accounts. But choose wisely when deciding who is good at managing your accounts. Past performance is not necessarily indicative of future results, and that makes the process even harder. An experienced Forex trader will also have draw downs trading forex managed accounts on occasion. So for the investor who puts his accounts into a trading program, remember to check your results on a monthly basis. It will drive you crazy if you only intend to be an investor and then watch it like a hawk. Leave that for the one who wants to learn the business.
What should you expect from forex managed accounts? If you are looking to get rich quick with the wild moves of forex then you will be in for a disappointment. Look for somewhat consistent returns like 3 to 5% or even a little more. But again, be aware that loses can and do occur. Another main point when considering forex managed accounts is the size of the initial investment. The larger the starting funds the more flexible a forex managed accounts manager can be. You see, there are short trades when the manager is in and out of the market quick. But there are also some long trades that can last days to months and these can tie up some capital. So a small account would only be involved in one type of trade. As an investment tool it makes sense to have some long term trades going especially trades that rake in positive swap or interest swaps are done everyday at 5pm est and are also called rollovers, depending on the currency pair you are trading if you hold that trade through 5pm est and depending on the interest rate differential between the pairs you may get positive interest which is a credit added to your account or negative interest which is debited to your account. Naturally it is advantageous to get positive interest and those rates vary from broker to broker and can normally be found on the broker platform.
Another thing to consider with forex managed accounts is accessibility to your funds. With many forex managed accounts, you have to lock in for 3 to 7 years. In other words you would not be able to withdraw or gain access to your money should you need it until your contract is mature. Other forex managed accounts only ask that you not withdraw until the end of the month or quarter. So be sure to ask the right questions about forex managed accounts if you decide that is the path you would like to take. In the face of stocks these days, it is an option worth exploring. Let me know if you want some help in deciding between forex managed accounts or self trading. I would be happy to help with either or both. I still like the "earn as you learn" mantra.
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