Is foreign exchange a prospective venture that interests you? If you are an investor looking to diversify your portfolio, exploring your options like forex account management is ideal. This service allows you to explore this asset class minus the stress of trial and error.
Learn more about managed forex accounts by making a quick read of this guide.
What is forex account management?
Despite being a relatively new trade, forex is the biggest and most liquid market globally. As such, it presents a significant opportunity to increase yields through foreign currency. However, it requires a specific level of expertise, which makes it tricky for traders who are new to the field.
Still, there’s no rule saying that newcomers cannot delve into foreign exchange from the get-go. Forex account management is a specialized service for investors who want to trade FX but don’t know how to start.
A managed forex account is the perfect choice for investors who have no profound expertise in foreign currencies. This offering enables individual investors with capital but no time or forex knowledge to join without needing extensive preparation.
A professional money manager handles FX trades on your behalf and takes advantage of the 24/7 availability of the market. They use their expertise in this asset class to make profitable decisions for you in exchange for a fee.
Best Managed Forex Accounts
Min Deposit: $100
Min Deposit: $100
Min Deposit: $0
Min Deposit: $50
Min Deposit: $50
Min Deposit: $0
Min Deposit: $10
Min Deposit: $100
Min Deposit: $100
How it works
Forex account management operates within the confines of leveraged forex trading. It offers potential returns for investors and managers who put their trust in FX professionals to perform trades for them. However, one should understand that there are serious risks involved in this setup.
To start managed forex trading, you should first open an account or have your manager do it for you. There is nothing much to do except to get updates from your dedicated expert to track your progress. In essence, they will buy and sell currencies on your behalf.
Your FX money manager has discretionary power over your funds. That said, they may not consult your opinion before finalizing a trade. They will charge an agreed upon performance fee whenever they yield profits from their moves.
How is forex account management important?
Many investors say that the ingredients to success in FX include a choice of currency pairs and accurate trend predictions. Still, an efficiently managed forex trading account can spell good fortune for you.
A managed forex account can become your armor against the uncertainty of this asset class. Is it worth investing in? There are several reasons to say yes to this service.
Risk management
Foreign exchange is a highly liquid market, but it is also volatile and inherently risky. Trading currency pairs can mean rapidly changing prices due to various economic and geopolitical events. It’s best to have an account manager who keeps track of the market and knows how to mitigate risks.
A dedicated FX account manager implements strategies such as setting take profit and stop loss values. They also know how to effectively diversify your investment portfolio to minimize potential losses. More importantly, they will never invest in a currency pair that you cannot afford to lose.
Maximizing profit
Forex account management aims to enhance your profits from trading currency pairs. Money managers can help you do so by optimizing your strategies and applying their expertise in using leverage. They evaluate your trading performance and make necessary adjustments accordingly.
Emotional Control
It’s easy to lose your cool when trading forex because of market volatility. At some point, your upward gains can turn into losses in the blink of an eye. However, you cannot let your emotions take control over you when trading.
Partnering with a dedicated manager prevents you from making irrational and impulsive decisions, helping keep your finances in check.
Preserving capital
As a trader, one of your priorities is to preserve your capital. While it’s easy on paper, many investors trade more than they can afford due to the temptation of get-rich-quick schemes. A forex money manager knows how to protect your capital and keep you in the trade longer.
Choosing the best forex managing trader
Forex account management is a specialized task that only a professional can accomplish satisfactorily. Here are a few factors you should consider when choosing the right manager:
- Fees: Aside from performance fees, traders may have a unique fee structure for managed accounts. For instance, some firms charge around 0.2% to 2.0% of your overall trading portfolio. If they use a trading platform, you may also shoulder monthly subscription fees.
- Qualifications and experience: It’s ideal to select managers with qualifications to show for like Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA). Try researching their track record and experience to know whether their strategies fall in line with your preferences.
- Trading span: Do you plan on trading currency pairs for a short while or are you in it for the long haul? Your managing trader must have the necessary skills that know how to get you to your targets.
- Transparency: While money managers have discretionary trading power, they should provide information when you ask for it. That includes fees, strategies, and risk mitigation methods that are relevant to your portfolio.
- Communication: Find a managing trader who has open communication to offer. They should consider your preferences and requirements and tailor strategies accordingly. Having multiple channels with 24/7 availability allows you to get updates about your account whenever you need them.
Is forex account management safe?
Investing in foreign exchange is generally safe and reliable. However, the manager you choose can secure your investment and help you reach your goals faster. That said, it’s vital to pick a managing trader with credentials and expertise that match your risk appetite.
It would also give you peace of mind to know that the managing firm implements security protocols for their services. From encryption to anti-fraud and cybersecurity measures, they should offer a high level of safety for every investor.
The takeaway
The best forex account management providers are those who deliver and exceed your expectations. The trust and security they offer are paramount to having a worry-free experience in FX trading.
Before you pick a managing trader, make sure to evaluate their qualities and services thoroughly. It’s a great step towards gaining knowledge about this asset class and becoming an expert in the future.
