Learn More About Managed Forex

There are a very few ways to earn money in the forex markets. You could trade an account yourself or you can set up a managed account. By using a managed account means that you will use a robot to make your decisions for you or you'll hand your funds over to a professional trader to manage your money for you.

Managed Accounts

In a managed forex account, you give your money to a professional investor and he manages it for you. In exchange, he'll take a management fee, that's usually between 10 and 20 percent of the profits. If you don't know how to trade yourself this could have its advantages as you won't have to spend endless hours analyzing the markets. The returns on managed accounts can differ widely. Some funds will average 20 percent annually or more, a few will be lucky to produce 10 percent annually, while some will lose money. Most managed accounts seek participants with at least $5,000 to invest. Look for a manager with at least a five-year track record.

Auto Trading

In another form of managed forex called auto trading, a professional currency trader links his account with yours by using a software program and his trades are automatically placed in your account. With this service you pay per month rather than a percentage of profits. This service is newer and therefore the track records are usually only several months old.

Expert Advisers

A forex expert adviser is a set of rules that have been programmed into the MetaTrader 4 software package. It will automatically execute trades in your account 24 hours a day. The long-term track record for this type of managed account isn't the best.

Hedge Funds

When you have sufficient funds, you are able to join a forex hedge fund. However, you'll need to either have an income of $200,000 for the past two years or a net worth of $1 million to do so. This is an investment vehicle only for those people who are already fairly wealthy. Like other kinds of managed funds, the fees are based on performance and the industry standard is 20 percent, although some managers will charge as much as 50%.

Risk

Just like any investment vehicle that will require you to hand over your money to someone else, there's a risk that they will either lose it or run away with it. When investing in a hedge fund or managed fund, do your due diligence. Forex is a fast-paced market and there's always a probability of loss.