Forex Managed Accounts: Are They For You?
Without a doubt the one key factor in sourcing a managed forex account is to make certain that you have control over your own account at all times. That is the ability to revoke the ability of the trader to actively trade your account and also to withdrawal funds at any time you wish. Any other situation leaves your account wide open to abuse, fraud and just general trader incompetence. Over the years we have witnessed many managed forex scams where funds have been fraudulently stolen or misappropriated leaving investors with little or nothing in their account. Make sure that before you send funds you are provided with an LPOA or “Limited Power of Attorney” form and that any funds you send are directed to the account of the broker, who is authorized to receive client deposits.
On the other hand, funds where client funds are aggregated into a pool, and where the funds are controlled by the trader themselves don’t offer this type of protection to clients. Registered brokers operating in a regulated jurisdiction are subject to rigid and substantial minimum capital requirements and regular audits on all financial records and client funds.
Managed forex accounts are a great solution for those people who find they do not have the time or necessary skills to trade the forex market. This alternative allows investors to benefit from the opportunities available in the forex market. However, experience has shown us that many investors are exposed to the darker side of managed investments, such as trader incompetence and less than scrupulous forex brokers.
Unfortunately in recent years we have seen a lot of managed investment scams, most infamous in recent history being perhaps the largest scam of all in the case of Bernie Madoff and his associated scams. This scam involved perhaps hundreds of billions of dollars of investors funds. This not only sent a jolt through Wall Street but also the whole managed investment arena worldwide. Here was a former NASDAC Chairman, someone almost beyond reproach and something of a Wall Street icon involved in the biggest scam of all time. The simple fact of the matter was that he had managed to scam even those charged with overseeing the industry and had succeeded in doing so for perhaps 20 years.
The money manager or funds trader is principally chosen for his ability to manage and minimize any risk. This is usually applied in the form of knowing when best to take a loss and when to take a profit. The success of the managed account trader is decided by their aility to remove themselves emotionally from the psychological factors that effect the cycle of trading. This in itself is very difficult to achieve and hence why consistent traders are both well paid and highly sought after in all areas of money management. The fact is that emotion usually dictates that we behave in a way that is counter productive to producing consistently profitable results.
The principal purpose of any managed forex account is to achieve sustainable high, long term results, with a minimum amount of draw down and a demonstrable long term record. Search for an investment provider who can prov these attributes over an extended period of time. Three to 6 months of trading statements is simply insufficient to make an informed opinion on the longer term prospects of a managed investment offering.
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