What's a managed forex account (and how to decide on having one)
|A managed forex account, put in simple words, is having your own trading account, but someone else trading it in your name. Basically, you handle control of your account to someone else. True, an account manager can't retrieve money, so some may claim that they don't have full control of the account, but they can burn it as fast and easily as any gambler newbie, so actually, they do have control of your money. The account manager will charge you a fee, as any investor advisor that manages traditional equities and bonds accounts.
For those starting in the forex market, and quickly losing their money, thinking of a managed account become a highly-weighed option to make money "easy." The most usual promise is "great profits, low risk, and no work." Great profits? Sure, if you have a great account… Low risk? Are you kidding me? Do I really have to explain that? No work, well, I gave that one the benefit of the doubt, as your only work will be check your balance every hour, 24 hours a day, 7 days a week.
But things are not usually that bad. In fact, in ForexSQ, we have the tendency to analyze the worst-case scenario. If we can deal with that, then we can deal with anything. If you are short of time, and have no experience in the forex market, you can opt for a managed account, as long as you understand all of its benefits, and risks.
Above all, there are a couple of things you need to consider if you want to have a managed account:
First, the account should be at your name, and fully segregated within the broker. You have to authorize your chosen manager with a specific document where you let him/her trade in your behalf. Transparency is critical in this case. If you are asked to deposit your money, in an account at someone else's name, run away as fast as you can: that screams scam.
Then, you have to check for an historical performance of your manager, better if it is provided by the broker, or some other user of the service. You will want to handle your saving investments to a professional, as well as you will go for a doctor when you are sick. Unfortunately, there are good and bad professionals in every single profession. Be sure then, you are going someone experienced and with a long history in the FX market.
Just remember, past success is no guarantee of future benefits, and the manager is as human as you. He/she can make mistakes, and have a bad day. A responsible person, will just let the account alone for a couple of days, rethink its strategy and start over.
Also, remember that losing is part of the daily trading journey. As long as you win more than you lose, you are OK. The same goes for the manager. You can't expect him/her to have an overwhelming record of winning trades with no losses. That smells like scam also.
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