Instead of trading on your own, you may choose to have a professional trade on your behalf through a managed trading account service.
You place money into an investment account (frequently with the forex broker specified by the manager), sign up LPOA (Limited Power of Attorney) agreement, and the manager trades your account for a fee.
The investment account remains under your control at all times; the manager is authorized to trade, but cannot make deposits or withdrawals.
In some cases you can give explicit instructions to your manager as of how you prefer your funds to be traded.
This is a fairly common setup that works similarly for forex and ETFs, Stocks, and Bonds markets.
The pros and cons of Managed Forex Accounts
There are many advantages to participating in the forex market with a managed account. Above all, it eliminates the enormous time commitment required for active trading. You do not have to learn how to trade, keep abreast of the currency market, or develop a trading strategy. You can avoid losses due to inexperience and benefit from a network of professional traders, and analysts skilled in various aspects of foreign exchange.
Forex Managed accounts are sought by investors aiming for high level returns from leveraged forex trading. Be aware that you could experience severe losses, so know the level of risk that you are comfortable with and how much you can afford to lose. Risk can be minimized through diversification by using more than one account and manager.
Disadvantages include high fees and overall professionalism of the manager. Regardless of how good a manager’s track record may be, future performance is never guaranteed.
The best Managed Forex Accounts
It’s imperative for investors to research the account manager’s performance, experience, and reputation. Consider their track record age, historical performance data, trading strategy, use of leverage, and fees. In many countries forex management services are tightly regulated and it is always advisable to deal with the regulated ones.
Know your risk appetite, what return on investment (ROI) you can expect and the account model used, i.e., percentage allocation management module (PAMM), lot allocation management module (LAMM), or multi-account management module (MAMM) or other. Also inquire about the type of trading and trading system used, as well as any signal service or robo-trading software.
The best forex managed accounts have consistent overall profitability and a low maximum drawdown level. In some cases, investors have access to real time reporting on portfolio performance, and the manager is required to invest alongside the investors, have “skin in the game.”
Managed Forex Account tests by Forex Peace Army eliminate scams
Unfortunately, there is no shortage of scams when it comes to managed forex accounts. In addition to other common frauds, unscrupulous managers may practice “account churning,” which means that they do not care about making profits for their clients but thrive on volume trading commissions paid to them by the broker.
Forex Peace Army invites all professional account managers to join our performance testing program.
All tests are performed on live accounts with a $250 minimum initial account balance. The stats are pulled directly from the broker account. This prevents common scams like fake statements, over-optimized back tests, and demo account stats that show trades that would never be executed on real accounts in the same way. Churning is also detected in our tests.
Should the test fail, the provider must double the initial deposit amount to restart the test. Although it is normal to update, upgrade, and fix their trading strategy, Forex Peace Army’s position is that account managers must be confident in their service and risk their own money together with the traders.
By testing managed accounts, Forex Peace Army helps traders find good services that suit their investment goals and trading styles. We help legitimate providers by giving them exposure to a large community of traders/investors and adding credibility to their performance results.