Forex Trading Managed Account – Facts and Myths

A forex trading managed account is usually offered by a firm to VIP clients. It offers average to low annual profitability, at moderate realistic market risk.

Pros and Cons of Having a Forex Trading Managed Account

Having a forex trading managed account may be somewhat beneficial to busy people who also can afford to deposit significant amounts of funds to these accounts. The performance of these accounts is relatively low, and usually between 8% and 30% at best. Traders who undertake the task of trading these accounts have to trade at very low risk. The typical low risk forex trading managed account yields no more than 15% per year, more or less. Even if we assume a safe 15% return per year, for the long term. And after all commissions and fees have been paid, it still certainly doesn’t look impressive. Only the well-off can afford to deposit so large amounts of funds, so that 15% per year profit makes a difference to their lifestyle. By comparison, independent investors and traders, even those not trading full time, expect to make 10% to 15% a month (200% to 430% per year). And they usually come close to reaching these goals, through online CFD trading. Independent forex traders are often asked to work for these firms that offer forex managed accounts. It is not as if they have proprietary strategies and irreplaceable traders. There are many traders who can make 15% per year, at almost no risk, it really is peace of cake! The problem with many independent traders is that they have come out of long learning curves, and have lost money to learn trading. So they are trading their own accounts, which are very small ($20,000 on average). Where a 15% a year return would be very small. So these independent traders look to make more, perhaps 5% to 10% a month. It’s not about having the best forex trading platform and 7 computer screens. Independent CFD forex traders know that they have to do more with less. But the fact that many of them are offered jobs at firms who offer managed account services… Means only one thing, a shortage of competent traders in these firms. The good news is that anyone who works hard enough and has the courage to manage market risk and tricky trading. Can in fact match the skills of these independent CFD forex traders, which is remarkably good.

Why a Forex Trading Managed Account is Not Really a Good Deal even for Rich People

A forex trading managed account is simply a low yielding investment. Sure it helps rich people save time, but it still carries risks. There is the risk that the firm may not have good traders for years, resulting in very low profitability. If the firm is a serious one, there is no risk that the funds will ever be lost, but poor trading performance is bad. 15% per year return is by no means good. This kind of return can be achieved by the rich people themselves, dealing in the antiques market. On items such as collectible stamps and classic paintings. The antiques market is very illiquid and slow, but the rich can afford to wait for years. On the other hand the beauty of forex trading, and the whole point of financial trading, is to achieve more with less. And the forex market allows this to happen, when one has done their homework in-depth. The market allows you to profit asymmetrically in relation to the risk you take. And this allows you to make more with less indeed. This means faster profits, profits that are large enough to make a difference. And above all, the market is highly liquid, allowing you to buy and sell at any time. That’s why ambitious people will always consider becoming independent forex traders rather than considering classic investments.