Forex Managed Accounts Explained
A forex managed account will allow you to enter the forex market without trading on your own. With a managed account you do not have to do any trading at all. You will entrust your fund to the management company and they will act on your behalf.
There are two basic types of forex managed accounts.
1. Forex Standard accounts
This account type will place your money into an account in your name, and a manager will be able to trade with the funds in it. You will have access to view your account and monitor its progress. It will still be your money.
You have to accept the risk that even a skilled account manager cannot predict the markets 100% and you may have to take some losses. The broker is there to make you a profit, and chances are they will.
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2. Forex Pooled Accounts
Pooled accounts carry a certain risk of fraud. You will have you rmoney placed into a pooled account, along with other traders, and managed by the broker. You are paid a percentage of the profits.
The theory behind pooled accounts is that your profit and loss will be spread evenly and results more stable then in with a standard account. Be aware that you will may not know what is going on behind the scenes and there are unscrupulous companies that may make small payments, but in actuality are stealing your money.
Be wary of any forex account manager that guarantees a certain percentage of return. Forex trading comes with no guarantees, avoid any company that tells you otherwise.
A well run, honest pooled account will have the benefit of stability and predictability. However, you should research a company offering pooled accounts even more thoroughly than usual before you decide to invest.
Whether you choose a standard or pooled account, you need to shop around. Avoid managers who insist on you signing up with their preferred broker. Usually this means that they will recieve a commission on all of your trades, that gives an incentive to just make many small trades regardless of profit. Even if their commission is worked in a different way, this is surely not the way to find the best broker. It is wise to choose a company that allows you to select your broker.
You should also consider one of the many software solutions to automate your trading. Automated forex trading robots can take the emotion out of forex trading and increase your chance at success.
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