July 9, 2010

Managed Forex Funds: Evading The Stumbling blocks

By Planet Wealth

pnbsp;Anbsp;a href=http://www.managedforexaccounts.net/ target=_selfmanaged trading account/anbsp;allows a potential investor who does not otherwise have the necessary time or skills to take part in the potentially lucrative foreign exchange market. A managed forex account can also be well suited for the investor who likes to have his trading account to be managed by a group of professionals. In keeping with the sound philosophy of diversified investments it is well documented that there is no right correlation between the forex and equities markets. It therefore is sensible to allocate a percentage of your investment capital to a forex managed account./p
pnbsp;A managed forex account is basically where you allocate the task of trading your brokerage account to a money manager. The money manager or trader is given the job of generating money on the account in exchange for a percentage of the profits in the form of a performance fee. The exact performance fee varies but is usually in the range of 20 to 50% of profits, plus there may be a yearly account fee in the realm of 1 to 2% of the remaining balance./p
pnbsp;Keep in mind that you have to be realistic about the amount of capital you allocate to foreign exchange trading. It is simple to be seduced by the thought of double digit returns each month and invest everything you could have in it. It is honest to suggest that of your total capital a honest percentage to classify as risk capital is 10 to 25%. Donrsquo;t be greedy and bet the farm, start with the minimum capital requirement and if it proves to be a profitable and well run managed account program invest what you could reasonably afford./p
pnbsp;The risks of trading forex can be high but they are also controllable given that strict rules of money management are effectively applied. One benefit to using a regulated broker is that theyll provide brilliant trading tools to be able to risk management techniques in place. Be aware of course that currency exchange dealing is always purely speculative and any capital invested should be what is classified ldquo;risk capitalrdquo;./p
pnbsp;Legitimatenbsp;a href=http://www.autotradingservice.com/ target=_selfmanaged forex accounts/anbsp;will nearly always have you invest your funds directly with a registered broker in a regulated jurisdiction. This arrangement gives you the best protection from potential scams, and also gives you significant control over your funds. Usually with trading accounts over a certain size your funds never really leave your bank account until at the end of the trading month your account is credited any profits less the fees payable to the broker and the money manager. This gives you the ultimate protection as the funds are kept with a government guaranteed bank. You will also earn interest on the unused funds. This is certainly worth looking into if you have an account of over $1m./p
pnbsp;The returns on this kind of forex investment vary greatly. All you really have to go on is the trading history of the company involved. Simply because a company was claiming excellent returns in the past, doesnt imply these returns can be guaranteed into the future. Your investment returns will depend on the prevailing market conditions and the ability of the money manager to best adapt to these conditions. Most reputable money managers aim for a relatively conservative figure of between 1 to 10%, but more importantly aim for consistent returns and low draw downs, or consecutive trading losses that eat into your trading capital./p
pnbsp;Invariably any reputablenbsp;a href=http://www.managed-forex-accounts.info/ target=_selfmanaged forex/anbsp;provider gives you an LPOA or Limited Power of Attorney Form to sign. This is simply a form that allows the money manager access to trade your account with a broker, whilst not really allowing them any access to withdrawal funds. This gives you significant protection from any potential abuse. Be extremely wary if this facility is not offered to you as an investor.nbsp;/p

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