Numerous brokers are providing managed accounts to aspiring and long-time forex traders. It is a new forex account breed especially useful for novices in the foreign exchange landscape. It takes a significant amount of time to become acquainted with various Forex trading intricacies, even if you can access a plethora of free training courses and educational materials.
Obtaining consistent profits in the forex trading world requires loads of preparation and effort. Otherwise, you could fail terribly and may lose some money too. However, with managed forex accounts, traders can get involved in foreign exchange markets, which is quite similar to partaking in the stock market through mutual funds.
Are you an aspiring trader who wishes to learn about managed forex accounts and how to choose them? Continue reading this article as it discusses everything you need to know about these accounts to make a well-informed decision when selecting this account.
Managed Forex Accounts – What You Should Know Before Choosing an Account
Forex managed accounts allow investors to attain the services of experienced managers or automated trading systems who manage their accounts after charging a particular fee. The manager always favors the investor. Breaching the contract has terrible consequences for the account manager and often leads to sizeable criminal charges.
The professionals handling the investor’s account have to report to them and provide progress updates regularly. In most cases, they charge yearly fees of one or two percent for handling the accounts. It comprises of the total assets under management, aka AUM.
Managed accounts in forex are ideal for traders looking to generate profits from leveraged trading. It is a risky venture for those who don’t know. It is not suitable for inexperienced individuals, so many people delegate this responsibility to professionals. It consists of entering some money in your forex account, after which a professional will overlook the entire procedure.
These accounts are becoming increasingly popular because, if handled correctly, investors can gain massive profits. However, not being careful when trading could also lead to severe losses.
Think About these Factors when Picking a Managed Forex Account
While there are tons of considerations to help an investor choose the right managed forex account, the ones mentioned below are arguably the best and help you choose the most reliable option.
- Make sure the account has been operational for more than two years. It will ensure that it doesn’t have a history of scams, as most fraudulent brokers disappear within months or years after scamming the investors. Check the trading account performance record on such reliable sources like fxblue or myfxtools.
- The account must have a decent customer support roster. It must have the ability to hire people from different parts of the globe, preferably those who can communicate in your native tongue.
- Does your account have a global presence in numerous countries? It must also include training and local seminar presentations.
- Check if your preferred managed forex account can get withdrawals and deposits processed quickly, preferably two to three days, as it is essential for obtaining funds on time.
Consider Your Reasons before Choosing a Managed Forex Account
Some of you might be wondering why anyone would allow a stranger to handle their capital. Well, there are numerous valid reasons why individuals choose managed forex accounts. It would be best if you also considered why and how this account type could benefit you. Many of you reading this might be new to this, so let us discuss how a forex managed account can benefit you. Firstly, signing up with a well-recognized broker will provide you with high regulatory control, transparency, and security. It is the perfect solution for novice traders who don’t have confidence in their knowledge and skills. Managed forex accounts help them generate decent profits in very little time.
Placing your trust in a professional instead of closing and opening your positions based on hunches is wise. Skilled account managers can provide adequate advice and guidance to help you learn about this field. Of course, you will need to pay a specific fee for this service, but it will benefit you in the short and long run. Moreover, you must remember that you are paying for the account manager’s extensive experience, competence, efforts, and time.
It would be best to choose well-reputed managed forex accounts by researching and taking advice from long-time traders. What’s more, traders have the freedom to cancel their Limited Power of Attorney at any time. You can cancel it once you gain sufficient trading experience and manage your capital without assistance.
That said, some people know everything about forex trading but don’t have enough time. These accounts can be incredibly helpful for them as they generate side earnings, while investors can focus on their priorities.
Don’t Forget the Calmar Ratio
Consider the managed forex account manager’s Calmar ratio before choosing it. The ratio pits a manager’s average yearly return rate against the overall drawdown of a particular period and determines their average. A high Calmar ratio indicates a favorable risk-adjusted return, while a low ratio shows an inferior risk.
Classic vs. Automatic Accounts
Well-reputed solo trading pros and companies provide certified classic accounts. They provide investors with a specific rule set and let you determine your conditions. Managers either choose ready-made developments or self-made strategies to determine the market’s trend movements. The market surprise and human factors of the classic forex managed account type are ideal for making adjustments, resulting in profits even when conditions are unfavorable.
On the other hand, automatic account types are robotic and provide higher accuracy. Some would even argue that they are more reliable than the classic option since they run on algorithms instead of emotions. It results in balanced decisions and excellent profits. That said, both options have their benefits and can generate considerable revenue for investors if used correctly.