Despite the proliferation of automated trading platform available in the forex markets today, you can still find those who still prefer Forex Managed Accounts.
A managed forex accounts is an account you open with a forex trading firm and make a deposit. A trader in that brokerage firm will use the money to trade in the foreign exchange market on your behalf. The firm is in complete control. It’s like the firm having power of attorney on your money for trading in the forex trading markets.
A managed fx account differs to other funds in several ways. First, and perhaps most obvious, is that a forex managed account invests, or trades, in different currencies. Today, you can invest in a number of different forex investments. Some forex managed funds invest in currencies for the long term, and may hold positions for many weeks or even months at a time. Other forex funds may only take positions for the short term, indeed they may be in and out of the market in only a few hours, or occasionally, less than an hour. We call these latter types of traders day traders, or ‘intra day’ traders. Very often, these traders will close their positions by the end of the day, so they’re not exposed to any risk overnight.
Another unique feature of a forex managed account is that, unlike a mutual fund, an investor has real time, 24/7 get into to their account. This can be seen with several examples. Firstly, the investor can login to their account online, any time, and see their account balance. Now, this is not logging in to the website of the forex manager, but the web page of the forex broker. Therefore, this gives the investor a lot of confidence that that the account balance is genuine, and has not been manipulated by the forex fund manager.
Secondly, a managed forex account is different, as a client can take out his funds from the investment whenever he wants, and there is no withdrawal penalty, or restrictions. This can be contrasted with a normal fund, where there be quite severe penalties for early withdrawals.
Another key benefit of managed fx accounts is that the returns have little bearing to the returns of other investments. Thus the recession has not affected returns, in fact returns have actually increased. Thus forex funds are a great way to diversify your portfolio and boost performance.
If anything, the recent world economic crisis has presented many profitable trading opportunities, since as volatility all over the world increases, this volatility creates many opportunities to make money from the market turmoil.
Nevertheless, despite the pros of investing in a managed account, one requirements to do their due diligence before making an investment in such a fund. There are a lot of fraudulent forex fund managers in the marketplace today, the numbers of which are growing rapidly due to the rise of the internet, and the anonymity it provides. Careful research needs to be first conducted. At the very least, you should see evidence of the fund performance.
Because of this, it can be seen that managed fx accounts offer a number of advantages over regular forms of investment funds. However, you still need to realise that one requests to analyse the investment returns of the different managed forex providers, and conduct stringent due diligence to ensure that you will get the returns that you are seeking. It is only with such research that an investment in a managed forex account will be an effective one.