Learn More About Managed Forex

There are a very few ways to earn money in the foreign exchange markets. You are able to trade an account yourself or you can set up a managed account. By using a managed account means that you will use a robot to make your decisions for you or you will hand your funds over to an experienced trader to manage your money for you.

Managed Accounts

In a managed forex account, you give your money to a professional investor and he manages it for you. In exchange, he’ll take a management fee, which can be usually between 10 and 20 percent of the profits. If you do not know how to trade yourself this could have its advantages as you won’t need to spend endless hours analyzing the markets. The returns on managed accounts can differ widely. Some funds will average 20 percent per year or more, some will be lucky to make 10 percent per year, while some will lose money. Most managed accounts seek participants with at least $5,000 to invest. Look for a manager with at least a five-year track record.

Auto Trading

In another type of managed forex called auto trading, a professional trader links his account with yours using a software program and his trades are automatically placed in your account. Using this service you have to pay monthly rather than a percentage of profits. The service is newer and therefore the track records are usually only a few months old.

Expert Advisers

A forex expert adviser is a set of rules which have been programmed into the MetaTrader 4 software program. It will automatically execute trades in your account 24 / 7. The long-term track record for this type of managed account is not the best.

Hedge Funds

When you have sufficient funds, you are able to join a forex hedge fund. However, you will have to either have an income of $200,000 for the past two years or a net worth of $1 million to do so. This is an investment vehicle only for those who are already fairly wealthy. Like other types of managed funds, the fees depend on performance and the industry standard is 20 percent, although some managers will charge around 50 percent.

Risk

As with every investment vehicle that requires you to hand over your money to someone else, there is a risk that they will either lose it or run away with it. When investing in a hedge fund or managed fund, do your due diligence. Forex is a fast-paced market then there is always a chance of loss.