Managed Forex Trading – Risks And Benefits
Managed forex trading can be defined as funding an expert trader, a trading company, or a forex robot to trades for you. When you have extra money that can be invested instead of stacking in your bank account, this method is one of the best.
There are some benefits that you can gain from managed forex trading:
1. If you still have doubt, you can perform testing by opening a small account. If you want to test by invest in small amount, some forex broker even allows $30 as initial deposit.
2. A credible trading company have transparency policy; this means they will tell you about what they do with your account, the executed trades, how much profits and loss, how much they take as their compensation/commissions, what currency pairs they trades, their strategies to identify entry price, etc.
3. If you choose professional trader, your money is managed by professionals who do trading as a living.
4. If you choose forex robot, your money is managed by tested software that has been proven to make profits from forex market.
5. A real trading company will also have real time account management and reports which allow you to access detail reports for the trades at anytime as well as ask for a withdraw whenever you want. Note: for money withdrawal, it will still require some times to process.
6. If you don’t know anything about forex market or you just simply don’t want to bother with such details, you can just pass all the trades to the company/robot and waiting for the profits reports.
However, managed forex trading is not without risks. You have to aware that no trading company can give their promise to make profits for you in a paper with their company logo, CEO sign, and company’s stamp. Formally, it is against the law to promise such things, but in the other hand, it also gives them a secure position.
How? At the front page of a forex company website, usually you will see “Managed by professional traders” written with big fonts, but these are some points that you get when you click the tiny “Risk Disclosure” link way at the bottom of the page:
1. “The possibility exists that you could sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. You may be liable for losses that exceed the amount of margin that you post. ”
2. “All opinions, news, research, analysis, prices or other information contained on this website are provided as general market commentary and do not constitute investment advice. We will not accept liability for any loss or damage, including, but without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.”
3. “We have taken reasonable measures to ensure the accuracy of the information on the Web site, however, the company does not guarantee its accuracy and will not accept liability for any loss or damage which may arise directly or indirectly from the content or your inability to access the Web site, for any delay in or failure of the transmission or the receipt of any instruction or notification sent through this Web site.”
Basically, according to this Risk Disclosure, they don’t have any responsibility to make profits for you as the investor. They will have their earning from spreads or commission per trade; it doesn’t matter if it is a losing or a winning trade. Bottom line: they have nothing to lose in each trade while you put your money on the line. This is a reality that really exist in managed forex trading.
So, is it a good idea to have a managed forex trading account in a trading company? Yes, IF you can find a real trading company with real skilled traders. You have to be very careful when you trying to find this type of company since forex market are full of unskilled people who can spit very convincing bragging. They are the scam forex companies.
They are attract investors by promising various benefits and make him deposit his money, believes that it is the wisest step. This account is not really used to trades at the forex market; these scammers are using current market data to make some analysis and pretend to make trades based on it. These trades mostly contain of loss trades and they devised various excuses for their losses. After the investor doesn’t have any money left, they will use the risk disclosure to answer any dissatisfaction and continue to pursue the next target.
It is not easy to spot these companies; I can only suggest you to be very cautious of these signs from a company:
1. Promise a lot of profit.
2. Promising something impossible such as no financial risk.
3. Refuse to give their performance track record.
4. Engage high pressure tactics.
5. Encourage you to transfer money quickly.
6. They reach you by unsolicited phone calls, sometimes even through an outsource service.
With various risks behind it, managed forex trading is still a great way to invest your money. Just make sure you really cautious about where you put your money.
Watch where you invest your money. Check online forex trading broker for smart ways to recognize a fraud forex broker. Also, look at free automatic forex trading system to see how to utilize free automatic system from your broker.
