JDFN Financial Network

Using Managed Accounts as a Trading Alternative

236

In the world of Forex investments, there is a lot of ways to start operations in a real account. For example, you can trade yourself your own capital, you can hire special services that offer to send trading alerts or signals, and trade those on your account or you can even pay a professional to handle your account so you do not need to have any direct contact with the market.

Many people prefer the well-known managed accounts, since the whole trading responsibility or psychological and physical pressure does not fall upon the account owner. Nevertheless, traders must take into account certain aspects to invest in managed accounts so they can do it correctly and
obtain profits.


What are Forex managed accounts?


Accounts administered by third parties are known as managed accounts or Managed Forex Accounts. This type of account is characterized for being an account handled by a professional expert in Forex trading. In this case, the company or professional who will handle the account charges for his service and offers a variable profit rate which will depend according to each different company. In simpler words, it is a professional service where you entrust your capital to third parties so that they trade it on your behalf.


Managed accounts show huge benefits, as for example a good handling of the leverage, a topic that many traders still do not know well. They use advanced technology and it allows the client to deal with other activities without being dependent on what happens on the market. Later on, the company will deliver to the account owner its final reports with the results and he or she will have the freedom of withdrawing the profits at any time wished.


In this type of accounts professionals usually will offer from 4% up to 6% monthly profits.


How to open a managed account?


First of all, you must investigate the company or individual that you want to hire, making sure that it is neither a ghost business, nor any high yield investment program (also called HYIP), nor a financial institution and that it is, preferably, legally authorized by the entities that regulate them. It is even advisable that you investigate several companies at the same time so to be able to eventually work with more than one which
would give you an additional safety.

Secondly, you should determine the amount of capital that you are going to assign so that it is managed by the chosen professionals. Remember “not to put all the eggs in the same basket”, this is why it is recommended to split your capital in parts and to distribute them to be managed
among different companies or by different proven professionals.

Thirdly, you must contact the company or companies and specify what would be the contract that you will agree upon. That conversation must solve all your doubts and state the terms of the negotiation very clearly. You also must ask about the system that will be used to withdraw your money and if
there are any penalties, fees and additional commissions of any type.

Having already cleared all your doubts, you will have to proceed to realize the deposit and wait for some time to pass before you start seeing the results. These companies in general allow you to realize bank deposits, or use Paypal and other electronic banking alternatives, but the most common and fairly secure way of opening the managed accounts is with a credit card. After this, your account with the above mentioned company will generally be tied to a real banking account in your country and on your name or on the name of the account holder, where you will receive the profits and where you can
withdraw your money at any moment you wish to do so.

Remember that delivering your capital to a company that you do not know is a delicate matter and nowadays there are many unscrupulous persons who take advantage of this business type to defraud or scam people. Also, there are individuals without any real experience who offer these services and never achieve the promised results. For this reason, the importance of investigating properly, especially if it is the first time that you open an account managed by professionals, is paramount. It is advisable to look in the Web, which is the ranking or the safety level possessed by the company you are thinking of hiring, for instance there are pages on the Web that show you a
detailed list of which ones are reliable and which of them are not.

The trader has to bear in mind that, if he uses a managed account, tomorrow this company might go bankrupt, disappear or present problems of any kind that would put his money at risk, and this is very serious if the account holder uses this income to pay fixed expenses or if important
payments depend on this money.

For this reason I would recommend to all of you who want to earn an income with the Forex, to invest in education and learn to trade your own accounts as a personal business. After obtaining steady profits, you might then use the services of a company so it manages your account, but those would be your profits at risk, and not the money with which
you support your family.

There are persons who possibly want neither to learn nor to “lose” time with this, but possess an ample wealth and economic stability so they decide to take a managed account; nevertheless, this is not
the majority of cases.

Finally, do not forget that to invest in Forex you must implement a system of diversification, in which you do not centralize all your capital in the same place, either if you trade your own
account or chose the option of a managed account.

Managed Accounts Vs. Administering your Own Account in Forex


If you are thinking about entering the currency market, it is possible that many doubts arise about what type of account you can open or, in other words, how to start investing. For this you must know what is the difference between trading your own account and having a company or individual handle all the trades. Understanding the difference between each other one will help you
determine which is more convenient for you and fits your needs and time.

Managed Account: this refers to an account opened by the investor, who thereafter delegates the responsibility of trading that account to another professional person or entity, with many years of experience on the market. In this type of account, the investor can obtain the following benefits, depending on the company or person who is going to administer it:


• Use new technologies to analyze the market.


• Use the leverage in a suitable and professional way.


• Free yourself to do other activities and keep working at your actual job.


• Professional services provide you monthly reports and access to the account.


• You can withdraw your money whenever you wish without fees, this of course depends on every company.


• You do not need to be connected 24 hours to observe the markets.


With a managed account, you must take a certain number of precautions if this is the first time that you are going to give your account to be traded by someone else, because professional services can offer promises of benefits that they later do not fulfill, or simply be inexperienced and administer your account badly. You also must know what are the strategies and systems that the manager uses before giving him your money. In this case it is recommended to investigate very well the position and safety of the person or company where you will open a managed account.


It is necessary to emphasize that you must NEVER deposit your money in the personal account of the manager or in the account of the company that will give you the service. The more you research the more profitable will your investment be, since you will have a wide overview of the manager that you choose. Do not entrust your hard earned money to any person and do not get misled by the promises. In some cases this type of procedure is considered to be a part of the (in)famous HYIP (High Yield Investment Programs) which are, as their name indicates, investment programs which return a very high yield. This should indeed be read as “very high risk”!


To get an idea, in a managed account it is possible to get consistent and steady profits of an average between 4% and 6% of monthly interest, but all this will depend on the person who administers the account, since we all know about managers who can generate more than 6%.


Administering your Own Account: this type of account is simpler to explain, here the investor handles his own capital, that is to say you would be trading directly on the market and nobody else would be doing this work for you. In this case, you as a trader and investor must learn on your own all the adequate skills and strategies to trade the Forex, and later on perform transactions in demo accounts to get a good practice, then finally trade on the markets with real money. In the latter stage all the skills and strategies previously learned will be implemented.


You must know that:

• You will have to dedicate time to your professional preparation.

• You will have to dedicate time to trade and supervise the markets.


• You will learn from your own experiences.

• You will have to invest money in your education.


When managing his own account, the investor must operate under his own risk. Profits can be quite variable depending on the personal execution of trades, as it is impossible to give an estimate or an exact percentage of what you would be earning if you were managing your own account. On the other hand, in this case you trade your own account with your own capital, but under the services of a broker who executes the transactions under your indications, decided after a previous analysis. In this type of account you must implement your own strategies and operational skills and nobody else will intervene in them.


Finally do not forget that in any of those two forms of trading, you must investigate and prepare yourself to avoid huge losses or disappointments.



Views: 28

Comment

You need to be a member of JDFN Financial Network to add comments!

Join JDFN Financial Network

About

James Dicks created this Ning Network.

© 2024   Created by James Dicks.   Powered by

Badges  |  Report an Issue  |  Terms of Service