5 Tips For Selecting A Managed Forex Account
Managed forex accounts have grown massively over the past few years as investors have lost their shirts on the stock market and in real estate. This has gone hand in hand with the growth of the forex market. This article looks at the various benefits of managed forex accounts and how they enable the average investor to get into the complex world of forex trading.
A managed forex account is different to a typical mutual fund, or bond fund in a variety of ways. First, and perhaps most obvious, is that a managed forex account invests, or trades, in different currencies. Today, there are a wide variety of currency funds to choose from. Some forex managed funds invest in currencies for the long term, and may hold positions for many weeks or even months at a time. Some fund managers only take positions for a few hours, or even minutes – these are known as day traders, or intra-day forex traders. Quite often, these traders will close their positions at the end of the day, so they are not exposed to any risk overnight.
Another unique feature of a managed forex account is that, unlike a mutual fund, an investor has real time, 24/7 access to their account. This will be illustrated with some examples. Initially, the investor can login to their account online, any time, and see their account balance. These figures cannot be changed by your fund manager, so give a true view of the balance of your account. Secondly, a managed forex account is unique in the fact that the investor can withdraw some or all of his funds at any time, and there is no withdrawal penalty, or restrictions. Contrast this with other investments, where you may be locked in for several years before having access to your money. Another key gain of managed forex accounts is that they are not correlated to the stock markets, to bond markets, to real estate, or indeed any other asset class. Surprisingly, the financial crisis has resulted in great returns for forex funds. It can therefore be seen that currencies are a good way to create alpha through diversification. If anything, the recent world financial crisis has presented many profitable trading opportunities, since as volatility around the world increases, this volatility creates many opportunities to profit from the market turmoil.
But, even though there are many benefits of buying into a managed forex account, one wishes to do their due diligence before investing their savings in such a fund. There are a lot of fraudulent forex fund managers in the marketplace today, the numbers of which are growing rapidly due to the rise of the internet, and the anonymity it provides. Therefore, a potential investor must ask a number of important questions to ascertain certain information from the fund manager. Initially, you need to see evidence of the fund performance.
Consequently, it can be seen that managed forex accounts offer a number of advantages over regular forms of investment funds. You need to realise that one wants to analyse the investment returns of the different managed forex providers, and conduct stringent due diligence to ensure that you will get the returns that you are seeking. Only by carrying out such due diligence can you guarantee that an investment in a managed forex account will be a successful one.
Andy Curtis is a specialist fx trader and fund manager. It is also possible to obtain more particulars about researching managed forex accounts and assessments of individual forex managed funds at his web page especially designed for forex traders, Forex Village, where readers can also get the most up-to-date forex news.
