Forex Managed Accounts Pros and Cons

 

A lot of people want to get their share of the 3 trillion dollars a day Forex market pie. You can do it in a number of ways: trade yourself or let someone else do it for you. Let’s say you don’t want to do this yourself. How do you let someone else trade on your behalf without giving them your money?

The answer is with a Forex Managed Account. This is an account into which you deposit a sum of money, usually $5,000 and upwards and you give your account manage, a professional investor, a limited power of attorney. This manager is then able to trade with your money according to their discretion. However, they don’t have control over your money as they can’t withdraw funds out of your account. They can trade with your money but never take it for themselves.

Naturally, there are many benefits to Forex managed accounts as well as some downsides which you should consider before signing for one. Let’s go over some of the pros and cons involved.

Pros:

– Someone else is doing the trading for you so you don’t have to spend time on it. There are also accounts which are traded with automatic systems which may perform better or are able to trade around the clock, which a human being certainly can’t.

– The account manager is a professional in the field, while you may not have a clue on how the Forex market really works. This may give you a greater chance of watching your money grow and grow.

– With many Forex managed accounts, you can see your balance at any given time. The money is liquid and can be withdrawn whenever you want.

Cons:

– You need to be doubly sure that the person or firm who managed your funds know what they’re doing. After all, the recent financial crisis has shown that even the pros fail miserably at times. Not all companies are good so you will have to do your research.

– This is a service and it costs money. You need to make sure that this firm makes you a handsome profit, enough to pay them their fee and get a good return for yourself.

– If you’re an independent trader, you can usually start with as little as a $100. For a managed account, you will need much more. I’ve not seen anyone accepting new accounts at less than $5,000, a big investment for many people.

I recommend learning as much as you can about Forex, even if you do plan on getting a managed account. It will help you choose a better managing firm, and who knows, you may end up as a trader yourself.

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