What Are Managed Forex Accounts?

A managed forex acꦛcount is a type of currency trading account in which a professional money manager makes trades and transactions on behalf of a client for a fee, us꧟ually charged as a percentage of profits.

Individual investors who are not experts in foreign currencies but still want exposure to this asset class may consider a managed forex account. Managed forex accounts are also often chosen as sub-advised funds for money managers who want a currencies component to their portfolio but do not specialize in foreign exc🧜hange (FX) trading.

Understanding Managed Forex Accounts

Managed forex accounts are designed  for those who want exposure to the potential returns from 澳洲幸运5官方开奖结果体彩网:leveraged forex trading, are willing to take serious risks, and want to have professionals do the work of selection and trading. It involves putting money in a forex account and having a professional trade those funds in the highly leveraged 澳洲幸运5官方开奖结果体彩网:foreign exchange markets. Investors who opt for a managed account have the hope and e💖xpectations of large gains with the understanding that they could also experience severe losses.

Managed forex accounts offer exposure to an 澳洲幸运5官方开奖结果体彩网:asset class that differs greatly from stocks or bonds. Unlike these more traditional securities, which deliver returns in the form of share appreciation, interest payments, or dividends, forex trades gain in value when one currency rises or falls in relation to another. Investors in currencies typically do so to hedge risk in international markets or as speculators who recognize the🔯 opportunity for large shifts in pricing and values between international markets.

Individual investors and speculators typically open forex accounts and attempt to trade based on their own ideas. Many amateurs find this to be notoriously difficult, though the few that succeed are able to make solid returns—sometimes, notably higher than average returns on equities. Using the services of a professional manager is a way to avoid the extra time, effor♈t, and eventual losses that happen to most inexperienced traders. The hope is that a more seasoned professional can be trusted to deliver profitable returns.

Safety and Costs of Managed Forex Accounts

Foreign exchange markets are commonly used by sophisticated traders, who take advantage of their highly-leveraged nature. Forex has more liquidity and 澳洲幸运5官方开奖结果体彩网:trades at a much faster pace🅰 than stock and bond markets—in fact, forex is the most active market in the world with average daily 💜volumes of $7.5 trillion, as of April 2022. It also has relatively low transaction costs, making it a♔ popular forum for those who enjoy the thrill of speculation.

At the same time, forex markets can be dangerous even for experienced traders, not to mention beginners, who may lack a sophisticated understanding of the effects of high leverage on their positions. Newer traders may also not have a full grasp on how different news events, like economic releases or central bank 澳洲幸运5官方开奖结果体彩网:monetary policy decisions, affect currency prices.

By using a managed account, ordinary investors can take advantage of the expertise of experienced and proven forex traders. The downside is that the best managers typically charge high performance fees of between 20% and 30% of any profits.

Special Considerations

When opening a managed forex account, an investor should evaluate a prospective account manager's historical risk/reward profile. An example would be looking at their Calmar Ratio, a performance gauge that compares the average annual compound rate of return of their trading fund to the 澳洲幸运5官方开奖结果体彩网:maximum drawdown (the portfolio's greatest movement from a high point to a low point) over a period. The ratio is typically measured over a three-year period. The higher the Calmar Ratio, the better the manager’s risk-adjusted return has historically been. Conversely, the lower the ratio, the worse their risk-adjusted return results are. It is also worth noting that past performance does not guarantee future results.