What Is Managed Fx?

There are a few approaches to generate a profit in the forex markets. You can trade an account yourself or you can set up a managed account. By using a managed account means that you'll use a robot to make your decisions for you or you do hand your funds over to a seasoned trader to handle your funds for you.

Managed Accounts

In a managed forex account, you give your money to a professional investor and then he manages it for you. In return, he will take a management fee, which is usually between 10 and 20 percent of the profits. If you do not know how to trade yourself this can have its advantages as you won't have to spend endless hours analyzing the markets. The returns on managed accounts can vary widely. Some funds will average 20 % per year or more, some will be lucky to produce 10 % per year, while some will lose money. Most managed accounts seek participants with at least $5,000 to invest. Get a manager with at the 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 piece of software and his trades are automatically placed in your account. Using this type of service you pay per month as opposed to a percentage of profits. This service is newer and thus the track records usually are only several months old.

Expert Advisers

A forex expert adviser is a set of rules that have been programmed into the MT 4 software package. It'll automatically execute trades in your account 24 hours a day. The long-term track record for this form of managed account isn't the best.

Hedge Funds

If you have sufficient funds, you could join a forex hedge fund. However, you will need to either have an income of $200,000 for the past two years or a net worth of $1 million to do so. It is really an investment vehicle only for people who are already fairly wealthy. Like other kinds of managed funds, the fees derive from the performance and the industry standard is twenty percent, although some managers will charge as much as 50 %.

Risk

Just like any investment vehicle that needs you to hand over your money to another person, there is a risk that they'll 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 and there's always a chance of loss.

Why invest in forex? Read more.