What Is A Managed Forex Account And How To Invest In It?
Think about what can happen with your money if you let it grow for few years at let’s say 75% yearly ROI. Just for five years they will double 4 times. If you invest $10,000 and don’t withdraw any of the profits you will have $160,000 at the end of the fifth year. For 10 years this money will be already $2,690,000.
This may sound like a dream, but is definitely achievable with Forex Capital Markets even if you are not a great trader yourself. Returns of 75% – 150% per year are not unheard in the Forex world – they can really be achieved with a good trading strategy.
But how could you do it?
You don’t really need to do it yourself. You can use the service of professional forex traders or systems with zero fraud risk. This is called a managed forex account.
What Is A Managed Forex Account In Simple Words
In short it is a contract saying that your funds will be traded in the forex market for which you pay a percentage fee of your profit. The performance fees vary, but usually are between 20% and 40%. The best thing is you don’t have to pay fees if you don’t make profits.
With the managed accounts you don’t need to understand forex at all. You are not trading anything yourself, but just collecting the profits. The traders trade your money. Their motivation to achieve great results is the percentage fee they take. If the traders lose or make no profits, they won’t get paid for their work.
“But then they may run away with my money!”
No, they cannot do it. You deposit your money with a third party forex broker service, the funds are in your name and only you can withdraw. It’s simple as that.
How To Get A Managed Forex Account
The application for a managed forex account is fairly simple if you follow the instructions given by the provider. There are some documents to be submitted and funds to be wired. Let me outline the main steps:
- Find a good managed forex account provider. Indeed this is the hardest part. There are hundreds of offers out there, but which one to choose? Many of them have too risky trading style and the risk of trading loss is too big. Others are too conservative and barely beat the bank deposits. You need the golden middle – traders which outperform the mutual funds, but don’t put your money at huge risks. There are such accounts and some achieve 100% + ROI per year. You can check out our reviews for such offers.
- Apply for an account. This is simple. Just follow the instructions they give you. There are usually two sets of documents that you need to fax or mail. One is for the managed account traders, the other is for the forex broker where your money will be traded
- Make sure that you deposit at a third party reputable forex broker! I can’t emphasis on this enough. There are fraudulent services on the Internet which claim to offer managed accounts, but in fact they take the funds themselves. You must deposit your money only on your name with a forex brokerage service and NOT in traders name or in some unknown e-currency account.
- Deposit the funds. Most managed accounts will require at least $10,000 or $25,000 minimum investment on your part and for some the threshold is even $250,000. If you don’t have such amount, you’ll need to consider another form of investing.
After these steps your funds will start being traded. You can only wait and watch the profits rolling in!
What are the risks?
Any investment involves a risk and that is especially valid about the companies which try to achieve higher returns on your money than the conventional investments. The forex trading is one of the riskiest financial activities and even an experienced trader can lose your money.
The good managed account providers have strategies to minimize the risks and limits about how large part of the money can be lost – even in theory. Avoid investing with traders which don’t offer serious risk management. Check our reviews to see some of the best managed account providers which are available at this time.