Managed forex accounts have been around for a long time but have often floated under the radar of many aspiring traders. When trying to leverage forex for gain, there are many challenges that you will need to overcome.
Venturing into the world of online trading can be particularly daunting for beginners. There are so many things to learn and so many topics to touch on that the time taken to build even a basic level of knowledge can be quite a strong deterrent.
The investment of time, alongside the financial investment that would be required to build a foundation in trading, can either cause a pause on trading interest or send people down an alternative path.
Many would-be traders are drawn into social trading or copy trading platforms as a first step due to their relative simplicity. These types of trading platforms effectively allow you to copy or follow other traders who have more experience, usually for a small percentage of your profits. You can watch the activity of the trader you are copying and effectively learn whilst you earn.
Sounds good in the principle of course, but there are still no guarantees on results.
After all, these accounts that you follow during copy trading are just other traders and not necessarily professionals so there is the question of whether these account managers are targeting uninformed consumers.
Professionally Managed Forex Accounts Versus Social Trading ‘Gurus’
Managed forex accounts on the other hand are still able to take the responsibility off your own shoulders, but the funds can be allocated to a professional trader via a regulated trading platform. Having this third-party qualified and appropriately regulated is a huge reassurance when it comes to investing your hard-earned cash.
The fees associated with trading with a managed forex account are usually closer to 25% of profits, as opposed to 2-5% on copy trading type trading platforms but if you find the right account manager, is it worth paying the extra?
A huge difficulty then arises in how you actually go about finding a managed forex account manager that can be trusted, along with a good track record of success. There are various resources and managed forex account reviews that you can check to provide some level of reassurance that other users are having a good experience but that should not come at the expense of your verifying the regulatory status of the trading platform where you would need to deposit your funds.
Find the best-managed forex trading account for your needs
When trading forex yourself, you simply need to find the best broker, but with managed forex accounts you need both the platform and the account manager to be solid.
Once you have found a trusted account manager, you will need to set some basic guidelines as to the risk tolerance you have, and then sit back and review the performance as often as you like.
Forex trading can be very profitable when done well. When not, it can be quite the opposite.
During volatile market conditions (such as what we are experiencing at the moment), forex can move quite dramatically, and many people end up losing their accounts, or ‘wiping them out’.
This volatility is exaggerated even further with the use of leverage in trading forex.
With typical forex education leverage starting from 1:30 and rising up to 1:500 for some professionals, you will need a particularly good risk management strategy when trading these markets yourself. It should then be something that is of paramount importance when searching for a managed forex account manager that they have a very clearly defined risk.
The majority of managed forex accounts should set a maximum drawdown level so that you are not allocating your whole account to the market at a single time. Even then, with many account managers requiring minimum deposit levels of $1’000, but others more than $20’000, this can be a type of trading that is not ideal for the novice.
Social trading or copy trading usually will allow you to kick off your trading account with as low as $50 – $200 which is far more appealing to a wider segment of retail traders. That being said, there are still account managers within these platforms that set their own minimum level to follow their accounts considerably higher than that!
If you are considering venturing into managed forex trading, you are always wise to check out the best-managed forex accounts from trusted sources before you take those first steps to ensure all your bases are covered.