Losing control: But could a forex account manager be good for your trading?
When traders get into investing in forex for the first time, they have dreams of making a second income through timely, well-thought-out trades.
Of course, it doesn’t always work out that way, and it could be for a variety of reasons – are they putting in the hard yards to analyze the market correctly? Are they using the correct tools? Maybe they don’t have enough time to be ‘hands on’ in their trading?
In any of these circumstances, it might be smart to call upon the services of a forex account manager. In this article we will take a look at what services they offer.
What to expect from a forex account manager?
In layman’s terms, when you take on a forex account manager, you are essentially handing them your capital and saying, ‘Please go and try to make me some profit’.
That’s a pretty crude way of looking at it, but the truth is that your account manager will take full control of what you invest in and when you open/close positions.
For some traders, this defeats the object of why they got into investing in the first place, but for those who partner up with successful, results-proven managers, they have the peace of mind of knowing that they should return a decent yield on their investment.
Many in the business acknowledge that trading forex is a lot different from other asset classes such as stocks and commodities, and that’s why many investment firms now have dedicated forex specialists – the ‘one size’ approach doesn’t tend to work so well in the unique world of currency forecasting.
However, it’s not in the psyche of everybody to simply hand over money to a ‘stranger’, and when losses come along – as to be expected in any realm of investing – it can be a very tough pill to swallow.
The costs of managed forex accounts
As you may have gathered, there are two potential costs of managed forex accounts: financial and, possibly, psychological.
It goes without saying that managed accounts are not free, and you will have to pay a fee to your account manager for their services. That has to be built into your profit calculations, because if your ROI isn’t at a certain level, then you could still be trading at a loss.
And, as mentioned, the loss of control does not suit everybody. Forex trading is a world of high liquidity, lofty leverage and huge risk, and that’s why it can appeal to investors – opportunity awaits.
So, handing over the reins to an account manager, and watching on as they struggle to turn a profit on your behalf, is the kind of mental process that not everybody is able to endure.
However, if you can take a long-term view of managed trading, the perks speak for themselves.
The benefits of forex account managers
There is an alarming statistic that states that only around 10% of amateur traders are profitable in their endeavors – which, math fans will know, means that 90% aren’t.
By taking on a forex account manager, traders can leap out of that 90% bracket – or at least maximize their chances of doing so – by handing control to an individual who knows the market inside and out, and who (presumably) has a track record of success in delivering ROI to their clients.
The reality is that a lot of people play at being a forex trader, but only very few can turn this into a long-term, sustainable route to profit – for the majority, money is lost in what can be the most volatile of trading conditions.
Is a forex account manager right for you?
This question is pretty easy to answer: do you want all of the risk of your forex trading to be on your shoulders?
Clearly, the answer will depend on your experience level, the amount of time and energy you can dedicate to researching the market, and your appetite for risk.
If you have the time and the passion to study the forex market in great detail, and have learned the ropes of trading forex on paper prior to leaping into real-money investing, then you can at least have the confidence that you have done your due diligence.
However, if you aren’t able to dedicate the necessary time and effort into understanding the minutiae of foreign currencies, and if you are completely new to trading, it is essential that you consider the possibility of using a forex account manager.
They aren’t guaranteed to deliver success, but they are likely to be in a position of having a much better chance than you do of delivering positive returns.