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What Is The Best Managed Forex Account?
How do you quantify what the best managed forex account is? I guess at the end of the day, it would be an account that produces a very high profit and has a very low risk of the account being wiped clean. Unfortunately, few things in life are simple and it’s the same with managed forex accounts. There are many different factors that need to be taken into consideration.
First of all there is the profit. Everybody is in the game to make money, the more the better. Some accounts might produce a return of 30% per year and some may produce 130% or more per year. Initially, investors may choose to go for the higher producing accounts, but they won’t check out the other issues. They see the dollar signs and jump in regardless.
The thing is with higher returns is that generally, there is more risk involved. It might be that the trader trades with 5% of the investor’s capital. Obviously if the trader keeps on winning trades, the profit will be much higher. However, even the top traders have long losing streaks and they can decimate an account. Some traders don’t even use a stop loss or don’t have a strategy to hedge against losses. Once again, this can lead to an account being wiped out. A trader that trades with maybe 1% of the investor’s capital can still produce great profits but it would take a losing streak of cataclysmic dimension to ruin the account.
I have just come across a company that reduces risk to the minimum. This company has several managed accounts that can be opened independently. The thing that minimises the risk is that each of the independent accounts can be bundled into a basket and traded collectively, so that the risk is spread around. In other words, if one account isn’t performing well at the time, the other three or four accounts will offset the poor performing one.
Next to consider is the minimum account opening amount. Until a few years ago, only investors with serious money could open an account. Hundreds of thousands of dollars were needed, even a million dollars in some cases. Over the last few years, the minimum starting amount has dropped to on average $10,000 US dollars. This has given many more people the chance to reap the rewards on offer from the forex market.
Nowadays, in 2013, a few accounts, and more are forthcoming, have a low minimum opening requirement of $1,000 dollars. This is great news for people that are circumspect of opening an account. It enables them to get their feet wet to see if managed accounts are right for them. They consider that losing $1,000 dollars is far more preferable than losing $10,000 dollars, and rightly so. If the account performs well and they are happy, then they can add more funds when they desire.
Another thing to think about is the performance fee. These fees are what the trader takes in commission from the profits of the account. The majority of fees range from 25% and go up to 50%. Once again, the 50% performance fee may influence potential investors but the traders may be producing stunning profits and the 50% fees are justified. Conversely, the account that charges 25% commission may look preferable but the profit could be a lot lower.
So the best account could be one thing to one person and another thing to another person. The thing is to look at the package as a whole and think what you want. Is it high profit with a higher risk? Is safety a priority? Lower profits with less risk? Lower or higher performance fees with higher and lower profits? A lower minimum opening account? The choice is the investors. Find out more about these accounts at www.acorn2oak-fx.com