Managed Forex Trading Accounts
Managed forex is an area of forex trading that's continuing to grow.
Managed forex trading accounts are a way of taking advantage of the returns that forex can give you, without the need to actually trade a forex system yourself. The company which provides managed forex will place the trades generated by their forex system, either with a team of humans or with a trading robot, with the robot trading otherwise known as automated forex.
This frees up your time, which is the key benefit for most people.
They can earn income through forex trading without having to spend the hours everyday trading a forex system on their own.
And some people are not really that interested in trading forex, but would rather get the profits passively, and focus their attention on other money generating ideas :)
Using managed forex trading accounts is an increasingly popular, yet often undiscovered area of trading, where you can get returns much higher than" traditional" managed funds of say 20-30% a year (if that!), and where the drawdowns are relatively small or are very infrequent, when using a good forex system.
Sometimes the drawdowns are small enough, or are over a short enough time frame, to result in a smaller return that month instead of a negative return. This is a good thing.
Robot Managed Forex Accounts As Well Now?
As mentioned, some providers of managed forex use automated forex where the orders are executed automatically through a trading robot, according to the exact rules of a forex system, therefore eliminating mistakes that come from human error.
Trading robots are getting more sophisticated over time, and so are their programmers, which means that more and more systems are able to be designed and programmed into the automated trading software, and then backtested and forward tested, to take advantage of automatic forex trading.
However, many accounts still use human traders to live trade their trading system. Human traders may not be necessarily worse than robots, as it depends on the system that they're trading, and how uniformly they execute the trades generated. The ultimate test is their performance. After all, this is what counts ultimately.
Advantages Of Forex Managed Accounts
Therefore the advantages of using managed forex to trade are:
1. You do not have to trade the system yourself.
2. You will no longer have to deal with the trading emotions of fear, greed or worry.
3. The system is executed exactly the way it was designed, therefore avoiding mistakes, especially so with automated forex, but also applies to human traded accounts as there are teams that can trade over more hours than you could.
4. You will not be missing trades because you can’t be at the computer to trade all the time.
5. The performance of your system will be higher, as the full profitability of many systems occur when you’re taking all or a vast majority of the trades that are generated.
6. You’ll have time to look after your health, or to do other money making strategies.
7. You can take advantage of trading multiple systems and multiple markets.
8. No waiting through sideways or non-trending markets.
9. You will not have to spend the time to learn a trading system, when you could be generating a return in the meantime.
Forex Fund Managers
You’d want to choose a forex fund manager where their system provides consistent and high returns that forex trading is certainly capable of. So when you assess a forex fund manager, make sure you have a look at:
1. The profits on a monthly basis, based on a float similar to what you’d use.
2. The drawdowns, or if none, their smallest return month.
3. Their fee structure. Note that their graphs of returns usually takes into account the fees, but you should check whether this is the case.
4. Whether they provide help with choosing appropriate risk and money management models that are suitable for their systems.
5. Sometimes, there is a more than one system to choose from.
6. At what point the historical returns were based on backtesting or were based on actual real time trading results.
Also, getting more information to make sure that the returns they show are a) real and legitimate, and b) is based on a realistic float is an important part of your due diligence.
Managed forex is likely to rise in popularity because it allows profits to be made passively. And they’re not about producing the small returns of the “usual” managed funds either, making it actually worthwhile.
Watch this space for more managed and automated forex providers emerging soon. There’s one that is producing 100% returns every 3 - 4 months with a relatively smooth equity curve, using their own automated trading software, but it is not yet available for private investors. They may soon.
For traders who want to place the trades themselves, but do not want to spend the time to learn a system, would look for forex signals as an alternative. This is like the middle ground between traditional trading and managed forex.
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