Managed forex accounts have become one of the most accepted investments in recent years, with thousands of people opening such accounts every month. This article discusses the benefits of a forex managed account, and how to chooses the best account for an investor’s particular needs and requirements.
A managed forex account varies from other investments in a variety of ways. First, and perhaps most obvious, is the fact that the investment comprises not of shares in listed companies, or of bonds, but in individual currencies. Today, the choice for a potential forex investor is litererally massive. Some forex managed funds invest in currencies for the long term, and may hold positions for many weeks or even months at a time. Other forex funds may only take positions for the short term, indeed they may be in and out of the market in only a few hours, or occasionally, less than an hour. We call these latter types of traders day traders, or ‘intra day’ traders. Very often, these traders will close their positions at the end of the day, so they are not exposed to any risk overnight.
Another unique feature of managed forex accounts is that, unlike a mutual fund, an investor has real time, 24/7 access to their account. This operates on a number of different levels. To start with, the investor can login to their account online, any time, and see their account balance. These figures cannot be changed by your fund manager, so give a true view of the balance of your account.
Secondly, a managed forex account is unique in the fact that the investor can withdraw some or all of his funds at any time, and there is no withdrawal penalty, or restrictions. This can be contrasted with a normal fund, where there be quite severe penalties for early withdrawals.
Another key advantage of managed forex accounts is that they are not correlated to the stock markets, to bond markets, to real estate, or indeed any other asset class. Ironically, the recent economic turmoil has seen forex returns increase over the past 2 or 3 years. It can therefore be seen that currencies are a good way to create alpha through diversification. If anything, the recent world financial crisis has presented many profitable trading opportunities, since as volatility around the world increases, this volatility creates many opportunities to profit from the market turmoil.
But, even though there are many benefits of buying into a managed forex account, one requests to do their due diligence before making an investment in such a fund. But you need to careful to avoid forex investment frauds.. An investor needs to do his or her research. At the very least, you need to see evidence of the fund performance.
So, it can be seen that managed forex accounts offer a number of advantages over regular forms of investment funds. You need to realise that one requirements to analyse the investment returns of the different managed forex providers, and conduct stringent due diligence to ensure that you will get the returns that you are seeking. It is only with such research that an investment in a managed forex account will be a successful one.
For more information about managed forex funds and individual managed forex accounts, read our recent article on the subject.
