Managed forex trading is when a professional trader or money manager actively trades a forex account on behalf of the investor. The investor retains full control and ownership of their account, but entrusts the trading decisions to the manager. This can be an attractive option for investors who do not have the time or expertise to actively trade themselves.
Before hiring a managed forex trading service, it is important to thoroughly research their track record and ensure that they operate in a transparent and ethical manner. There are various online resources that review the best managed forex accounts to make this aspect of the decision making process that much easier. It is crucial to clearly communicate your risk tolerance and investment goals with the manager so that they can tailor their strategy accordingly.
Additionally, some managed forex trading services charge performance-based fees while others charge a flat rate – it is important to fully understand the fee structure before making a decision.
Different Types of Managed Forex Trading
There are several different types of managed forex trading accounts you will want to be aware of, each with their own advantages and disadvantages.
One common type is the pooled fund, where the trader pools together funds from multiple investors and trades on their behalf. This allows for increased buying power and diversification, but also means that profits (and losses) are shared among all investors in the fund.
Another type is the individual account management, where a trader manages an individual investor’s account and makes trades based on their specific goals and risk tolerance. This approach offers more personalized service and decision-making, but may have higher fees due to its customized nature.
Some managed forex traders also offer copy trading, where investors can automatically copy the trades of a successful trader. This can be a quick and easy way for novice investors to enter the forex market, but it is important to carefully vet the trader being copied and understand their track record before investing.
Why Managed Forex Accounts Continue To Grow In Popularity
One reason for the growing popularity of managed forex accounts is the perceived potential for higher returns. As managed forex accounts can offer traders access to professional money managers, who use their expertise and experience; it is thought that this can generate higher returns than individual traders could on their own.
Another reason for the growing popularity is the low barriers to entry. Unlike other investment options, managed forex accounts require little initial capital and allow for flexible investment amounts.
Lastly, managed forex accounts provide convenience and ease of management for busy or novice investors. With a managed account, all trading decisions and actively managing the account are left up to the professional money manager, allowing investors to focus on other priorities in their lives.
Overall, managed forex trading can offer convenience, potential for higher returns, and access to professional money managers – but it is important to do your due diligence when choosing a service and clearly communicate your investment goals. Understanding the different types of managed forex accounts can also help you make an informed decision about which approach best suits your needs.