5 Things to Consider When Investing In Managed Forex
When selecting potential forex investment opportunities there are many things to consider. Here are five things that we consider should be uppermost in the minds of potential investors in managed forex products. This is by no means a comprehensive list but is a sound basis from which to build a successful Managed Forex portfolio.
1) Control of Your Funds
Without a doubt the one key factor in sourcing a managed forex account is to make certain that you have control over your funds at all times. That is the ability to revoke the ability of the trader to actively trade your account and also to withdrawal your funds from the broker at any time. Any other arrangement leaves your account open to abuse, fraud or general trader negligence. There has been many managed forex scams in recent times where funds have been fraudulently misappropriated leaving investors with little or nothing in their account. Make sure that before you send funds you are provided with an LPOA or "Limited Power of Attorney" form and that any funds you send are directed to the account of the broker, who is authorized to receive client deposits.
2) Historical Performance
Obivuously there is a huge advantage in being able to see a managed forex account traders historical performance figures. They also need to be verifiable figures, in the form of original statements. A spreadsheet of numbers or a table on a website doesn't constitute verifiable figures, no matter what the trader or company does to try and back up their claimed performance figures.
3) Good Money Management
Any professional forex trader will vouch for the fact that the most often overlooked factor for amateur traders is Money Management. the simple fact of the matter is that no trading strategy is complete without sound money management. Even a mediocre trading system can be profitable with the addition of sound money management principles. To apply sound money management takes considerable discipline and focus, attributes that in reality most traders simply lack. A managed account trader must possess these attributes to be a successful trader.
4) The Broker
Another important fact to consider when choosing a managed forex account is which broker they use to execute their trades. Do they offer tight spreads and fair trade execution and do they process deposit and withdrawal requests in a timely fashion? A bad broker can really ruin your whole managed account experience. Often I have had to deal with brokers who take weeks to process your withdrawal requests and can also take weeks to put your funds into trade. This can end up costing you thousands of dollars and months of wasted opportunities. Sometimes it is bureaucratic incompetence while in other cases it may well be something more sinister, all the same it is best to study up on prospective brokers and see if they have a good bad or indifferent reputation amongst other traders.
5) Low Past Draw Down Figures
Draw Down is a fact of life when it comes to forex trading, but having said that it is also necessary to figure out your appetite for risk and how much draw down you are prepared to tolerate. Look at the historical draw down figures that the provider has reached and then decide if you are comfortable with that figure. I would suggest as a ball park figure of 30%. If you aren't comfortable with it, move on. Remember it is your own hard earned money so do your due diligence on the trading history and ensure that it is compatible with your own appetite for risk. - 23217
1) Control of Your Funds
Without a doubt the one key factor in sourcing a managed forex account is to make certain that you have control over your funds at all times. That is the ability to revoke the ability of the trader to actively trade your account and also to withdrawal your funds from the broker at any time. Any other arrangement leaves your account open to abuse, fraud or general trader negligence. There has been many managed forex scams in recent times where funds have been fraudulently misappropriated leaving investors with little or nothing in their account. Make sure that before you send funds you are provided with an LPOA or "Limited Power of Attorney" form and that any funds you send are directed to the account of the broker, who is authorized to receive client deposits.
2) Historical Performance
Obivuously there is a huge advantage in being able to see a managed forex account traders historical performance figures. They also need to be verifiable figures, in the form of original statements. A spreadsheet of numbers or a table on a website doesn't constitute verifiable figures, no matter what the trader or company does to try and back up their claimed performance figures.
3) Good Money Management
Any professional forex trader will vouch for the fact that the most often overlooked factor for amateur traders is Money Management. the simple fact of the matter is that no trading strategy is complete without sound money management. Even a mediocre trading system can be profitable with the addition of sound money management principles. To apply sound money management takes considerable discipline and focus, attributes that in reality most traders simply lack. A managed account trader must possess these attributes to be a successful trader.
4) The Broker
Another important fact to consider when choosing a managed forex account is which broker they use to execute their trades. Do they offer tight spreads and fair trade execution and do they process deposit and withdrawal requests in a timely fashion? A bad broker can really ruin your whole managed account experience. Often I have had to deal with brokers who take weeks to process your withdrawal requests and can also take weeks to put your funds into trade. This can end up costing you thousands of dollars and months of wasted opportunities. Sometimes it is bureaucratic incompetence while in other cases it may well be something more sinister, all the same it is best to study up on prospective brokers and see if they have a good bad or indifferent reputation amongst other traders.
5) Low Past Draw Down Figures
Draw Down is a fact of life when it comes to forex trading, but having said that it is also necessary to figure out your appetite for risk and how much draw down you are prepared to tolerate. Look at the historical draw down figures that the provider has reached and then decide if you are comfortable with that figure. I would suggest as a ball park figure of 30%. If you aren't comfortable with it, move on. Remember it is your own hard earned money so do your due diligence on the trading history and ensure that it is compatible with your own appetite for risk. - 23217
About the Author:
Brendan Wilson is a forex trader with 12 years experience. Brendan is also associated with Forex Managed Accounts. Managed Forex Trader provides information and services to people interested in investing in Forex these can be view at Forex Managed Account Reviews.