Forex or the Foreign Exchange market is the market where global currencies are bought and sold. It’s the biggest over-the-counter market for trading currencies. Its impact on any economy is huge, and the economy impacts the forex market as well. The price of the currencies and exchange rates are determined by the market.
Large international banks and financial institutions are the principal participants of this market and financial centers around the world function as intermediaries between the buyers and sellers. You can run your Forex account on your own, but if you don’t understand how it works, or you don’t have time to manage it, you can hire people to do it for you. Your accounts will then be called as managed forex accounts.
What Are the Managed Forex Accounts?
Managed Forex Accounts are nothing but Forex accounts that are managed by professionals. These are an investment opportunity for people who are willing to take huge risks and expect a huge return, also want the potential return from the forex trading that is leveraged but don’t have the time or experience to do it on their own, so they hire professionals who do that for them.
The process is simple. You put money in your forex account and let the professionals handle it. Since the forex market is extremely volatile, because the prices of currencies go up and down in matters of minutes, there is a high risk but also high return. Forex brokers who manage those accounts offer their services with the minimum deposit of $2,000.
A Closer Look
The asset class that gets exposure from managed forex accounts by the forex account management services are quite different than those of stocks and bonds. In stocks and bonds, you invest in a stock or bond and wait for the price of the stock to get high enough so you can sell it and get a profit or wait for the bond to mature so you can get your money with interest. But in forex trading, you don’t have to wait that much. You see the rise and fall of the prices of one currency to the other and sell them when you think it won’t go up anymore.
Forex traders usually trade their currencies every day because you don’t know when one currency’s price may hugely fall. The price of the currencies changes due to the economy, politics, and of course, speculations. Individual forex traders try to gain based on their own information and speculations but this is quite tough because they aren’t privy to inside information. This is why managed forex accounts are a more trusted way to invest in this market. You give the job to a seasoned professional who knows his way in the market to make gains for you.
Cost And Safety
The forex market is very liquid and probably the most volatile market in the world. You can lose and gain huge amounts every day. Usually, the best forex account managers charge a high fee that typically ranges from 20% to 30%. You should always check the Calmar Ratio of the forex account manager before you hand him over your account. This ratio makes the comparison between the average annual compound rate of return of the manager’s trading fund and the maximum drawdown over the period.
Since the forex market is very volatile, you should be prepared for losing money even when your account is managed by professionals.