The phrase “Managed Forex” refers to a situation whereby an investor has their forex account traded on their behalf by a third party trader or company. The third party trader or company, is therefore engaged for the purpose of managing the forex trades for investor. This is solution may well suit the type of investor who has the risk capital to invest but not the necessary time or skills to trade.
High Leverage Equals High Risk
Attractive factors such things such as high liquidity, high volatility and high leverage all combine to make forex appealing for those with reasonable capital and risk tolerance to obtain higher than average potential profits on their investments. But of course investors need to be aware that with increased returns comes increased in risk. Having said that there is no form of investment that comes without some exposure to risk.
Risk Management
Risk management is always the key element to successful investing. This is why it is best to entrust this task to a professional money manager who is suitably trained in the discipline of risk and money management. Forex, however easy it may look to the casual observer, is fraught with potential pitfalls for the unwary. Often the figures we see quoted are in the realm of 95% of forex traders fail. Whatever the statistics say the fact remains that the chances of succeeding as an amateur trader are very slim indeed.
Proven Track Record
The answer for many people is to find a managed forex provider with a long and consistent trading record. I believe that a 2 year track record should be sufficient indication of whether the traders method of trading is satisfactory or not. Performance histories of less than 1 year simply don’t give enough information to be able to make a sound judgment on whether a particular strategy is suitable for a wide range of possible market conditions and any changes in “market personality”.
Due Diligence
In sourcing a managed forex provider it is most important that you do your own due diligence on each provider and not simply rely on the opinions of strangers on an internet forum. Many marketers have discovered the wonders of the forex market and frankly make a lot of unsubstantiated claims and quote outrageous figures. There are however good resources for genuine information available on the various forex forums and blogs. Make sure to research the company thoroughly and ask that they supply you with actual trading statements to back up their stated performance claims or provide proper audited reports that state how the figures where arrived at and whether they include fees and commissions and whether the figures are simple or compounded. Be extremely wary if the company cannot provide you with actual trading statements or audited reports.
Brendan Wilson is an experienced Forex Trader and commentator you can visit his site for more information about Forex Managed Accounts
