Is Forex Managed Money a Good Idea?

By: Jason Fielder

Managed Money is a much more common phenomenon in other areas of investing than Forex, but some companies offer this service, as well. Managed money is any means of investment where the investor decides to place their money in an investment fund that is handled by a professional or professional company instead of making their own choices in investments.

In theory, by having a professional handle the account you are more likely to see better profits result.

One of the best examples of managed money is a mutual fund. While managed money is much less common in the Forex, some professional firms still offer it. Most of the time the firm will have an account in your name, and then they will make all the trades for you.

They can do this through various agreements, basically a limited power of attorney that lets them trade that money in that account for you.

The investment firm makes a small amount of money on the bid/ask spread (this is normal for managed Forex accounts) and then most take a certain percentage of the profit made at the end of each month, anywhere from 15-40%.

This does give the company incentive to make sure you do well, since the more profit you make, the bigger a cut they get. The reverse is also true: if you don't make any profit, neither do they.

Most of these firms will have their own policies and paperwork to fill out in order to set up a Forex managed money account. Accounts should be available via Internet so the investor can see what trades are being made and what the results and account balance is. You should also receive the traditional paper statements via snail mail.

All accounts should also have some sort of stop loss to make sure that even if they take a beating, you're not in danger of losing all your money.

If you decide to use a Forex managed money account, you will not be able to trade yourself off that account. The entire point of having your money managed is trusting professionals to make the right transactions in order to gain you a larger profit than you would be capable of managing on your own.

Most of these accounts will have a minimum amount of deposit, often times at the $10,000 range or even higher. You will have to check out each individual investment firm to figure out what the minimum amounts are.

Managed money is one way to go, but it's still no guarantee of profit. If this is the direction you want to go, make sure to do your homework to end up with a reputable investing firm you can trust. Otherwise, look for a trading system that works and see if you can do it yourself. Everyone who trades profitably needs a successful system, so if they're just following a system - why not do it yourself?

Then you can keep that extra 30% profit, not too shabby at all!

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