Do Forex Managed Accounts Have Risks Associated With Them

Forex managed accounts allow anyone the opportunity to enter the lucrative currency trading markets without having to do the trading themselves. A managed account allows you to place your trust, and money, with an account manager who will handle your trading for you. Instead, you entrust your fund to the management company who will act for you.

There are two basic types of forex managed accounts.

1. Standard Forex Accounts

A standard forex managed account will place your money into a brokerage account in your name, the manager will have control over it to trade with it. You will have access to view your account and monitor its progress. It will always remain your money.

Even the most skilled account manager can not predict the market with 100% accurrace, therefore there will be losses at times. The broker will need to cover their fees and make you a profit.

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2. Managed Pooled Forex Accounts

You should know that there is a risk of fraud when dealing with pooled accounts. Here, your money goes into a pool held by the account manager. A percentage of the profits will be paid to you.

The theory is that the pool creates a buffer and your profits and losses will be evenly spread and thus more predictable than in a standard account. The problem is that you can never truly know what is going on, and there could be bad people behind that management company who are stealing your money.

You should be wary when a gauranteed percentage return is made by a forex account manager using pooled funds. If a company guarantees you results, be wary, forex trading has no guarantees.

It is wise to be careful, but know that there are honest pooled accounts out there that carry with them the benefit of predictability. You must thouroughly research pooled accounts and the companies behind them.

Be sure to shop around regardless of which type of account you choose. Some managers will insist you sign up with a specific broker, avoid these managers. This can be a concern because they will have the incentive to make many small trades regardless of profit just to up the broker’s own earnings. This is not the way to find the best broker. A reputable comany will allow you to select your own broker for your forex managed account.

It would also be wise to look into automated forex trading software.  Automated forex trading robots can take the emotion out of  forex trading and increase your chance at success.