Forex Trading is a risky business. It demands time, experience, patience and desire for success. Many forex traders find it difficult to follow the market movements and fail to act wisely and quickly when opportunity strikes. That is when manager accounts come in.
Managed Accounts are a solution for forex traders who seek a third-party help, either an automated account or a professional trader. After all, not everyone has time to learn all those charts, technical analysis, variety of indicators, news interpretation and other complicated, but necessary attributes in forex trading. So after feeling depressed about losses and the lack of understanding of forex market, forex trader might consider managed account which will, presumably, change you from the loser to the full-time winner.
There is a problem with this idea, though. In my opinion, there is no magic wand when it comes to forex trading. It is a major misconception that managed forex account will turn your misfortune to gold. And while you consider opening a managed account, you should keep in mind that there is a lot of scam online and most managed accounts are fraud. Manage accounts can be a trap, so I strongly suggest using only trusted forex brokers.
Who is in charge or your account when it comes to forex managed accounts? You have two options:
- Automated account
- Account supervised by another forex trader, hopefully, more experienced than yourself!
Automated account is managed by software that is simulating trading skills. It is designed to automatically make a decision based on strategies and expertise imbedded in its “memory” by experienced forex traders. It is, in a way, a form of artificial intelligence. It sounds so simple and easy, yet there is small catch. This trading program is based on the decisions made in the past. At some point the past may fail you. After all, forex trading demands a certain level of instincts, which the program lacks. When it comes to automated account the lack of “human touch” may become a minus.
The second option is a supervised account by an experienced and, hopefully, professional forex trader. Usually it is someone with years of experience in forex trading (or so they claim). Your only job is to fund the account and the rest is done for you. Let’s just hope it is profits instead of loss! Keep in mind that even a super-genius in forex trading can make mistakes. Besides, would you be managing someone else account if you are a top-notch forex broker? Not unless you paid well. That can only mean that a personal touch in managed account costs plenty and the quality you get is no necessarily the best.
Presuming that you didn’t step into a scam and you found professional forex broker, it still doesn’t mean that they will turn you into a millionaire over night. You fund the account and you pay for the managed services. You also expect positive results. That means your supervisor will be extremely cautious and conservative when it comes to trading your money. In the best case scenario the profits will be slow.
Last, but not least, forex managed accounts is a form of a prison. You put yourself in hands of the others. You invest money in others in hopes that they are professionals to earn enough for both of you! You do not have a complete control over your account, so don’t expect to, for example, be able to withdraw your money at the tip of a hat.
My suggestion is to avoid managed accounts, but if it is inevitable make sure you know exactly what you are getting into – find out everything you can about fees and commissions, terms and regulations, withdrawal conditions and, of course, get some kind of proof that the account supervisor is, in fact, professional.