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What Exactly is Managed Forex?
There are a few approaches to earn money in the forex markets. You could trade an account yourself or you can set up a managed account. Using a managed account means that you will use a robot to make your decisions for you or you'll hand your funds over to an experienced trader to manage your funds for you.
Managed Accounts
In a managed forex account, you give your funds to a professional investor and then he manages it for you. In return, he will take a management fee, that's usually between 10 and 20 % of the profits. If you don't know how to trade yourself this can have its advantages as you will not have to spend endless hours analyzing the markets. The returns on managed accounts can vary widely. Some funds will average twenty percent per year or maybe more, some will be lucky to produce 10 % per year, and some will lose money. Most managed accounts seek participants with at least $5,000 to invest. Choose a manager with at the least a five-year track record.
Auto Trading
In another form of managed forex called auto trading, an established forex trader links his account with yours using a software program and his trades are automatically placed in your account. With this particular service you pay monthly as opposed to a percentage of profits. This service is newer and so the track records are usually only several months old.
Expert Advisers
A forex expert adviser is a set of rules that have been programmed into the MT 4 software program. It will automatically execute trades in your account 24 hours a day. The long-term track record for this kind of managed account isn't the best.
Hedge Funds
If you've got sufficient funds, you could join a forex hedge fund. However, you will need to either have an income of $200,000 for the past two years or a net worth of $1 million to do so. It is really an investment vehicle only for people who are already fairly wealthy. Like other kinds of managed funds, the fees derive from the performance and the industry standard is twenty percent, although some managers will charge as much as 50 percent.
Risk
Just like any investment vehicle that requires you to hand over your money to somebody else, there is a risk that they will either lose it or run away with it. When investing in a hedge fund or managed fund, do your due diligence. Forex is a fast-paced market and there's always a risk of loss.
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