Learning the nitty-gritties and secrets of the forex market is not for everybody, especially individuals already busy with a day job or other important commitments pertaining to family and other efforts. For investors willing to invest capital in the hopes of making high returns, but those who do not want to be directly involved themselves, a forex managed account is ideal for them.
Best forex managed accounts refer to trading accounts where professional traders or “money managers” trade on the forex market on behalf of their clients, the investors. They usually charge a performance fee for the service. These accounts are totally segregated accounts, which are owned by the investor at a brokerage firm.
Setting up a Forex Managed Account
Best forex managed accounts are like investment accounts for equities and bonds, where the investment manager does not disclose the trading logistics involved. The client’s account cannot be accessed by the trader, as deposits and withdrawals can only be made by the client at any given time.
Usually, a Limited Power of Attorney agreement is signed by both the trader or money manager and the investor or client. It serves as a document where the client is entrusting his/her money with the trader to trader on his/her behalf. All details pertaining to fees are included in this agreement.
Advantages of Opening a Forex Managed Account
The complexity of the forex market with its cut-throat nature has forced many investors to go for forex managed accounts. As this account is handled by skilled and experienced fund managers, it alleviates much of the worry associated with hands on forex trading. Additionally it provides a range of advantages, which are mentioned below.
- Easier for Clients: Investors wishing to allocate huge sums of money in the hope of earning big can use forex managed accounts. They do not require the skills, technical know-how and experience, instead relying on the skills of the trader or money manager. Thus, this method is ideal for people engaged in other full-time occupations but want to earn more income.
- Fewer Amounts of Risks: Forex Managed Accounts are allocated to professional traders with proven skills. They have the required skills and knowledge to undertake the right trading decisions for amassing profits. This in turn reduces the risk for the original owner of the account, the client. The client can thus rest assured that profits will be generated by harnessing the expertise of professional trader. Forex signals identify the best time to enter or exit a trade, which are generated either by an automated program or by a trader.
- Better ROI: Compared to putting money in the bank, various studies show that setting up a forex account like this could provide 10 to 15% more of profits, providing a much higher return on investment. Hence, instead of putting their money in the bank to stagnate, investors can try investing in a managed forex account to earn much more without putting in any effort.
- Provides Diversity: When it comes to diversity in investment portfolios, majority of traders choose to invest extra funds in the stock market for buying precious metals. However, the forex market has been proven to be far more stable and profitable compared to the world of stocks. Thus if the stock portfolio of investors start to experience difficulties, they can easily invest their money in a managed forex account as a viable alternative. By diversifying their portfolios, investors can protect themselves from any sudden market crash.
- Control: Compared to many other types of forex trading, using a forex managed account provides more control to investors over their funds. This is because the trader’s master account does not allow the trader or money maker to adjust the funds. Deposits and withdrawals for the managed forex account are controlled solely by the investor him/herself. This provides them with the complete freedom to withdraw their funds if they suspect anything unusual.
A managed forex account is thus a great way to earn a considerable amount of passive income, with some of the advantages mentioned above. However, it should be noted that the managed forex account shall still be controlled by a third-party. Investors will have no say on how it will be controlled by the broker. Thus, it is advised from the investor’s point of view to select a reputed and reliable forex brokerage service.