Is a Forex Managed Account Right for you?

In the ever changing investment landscape managed forex accounts continue to be at the forefront and at times are the preferred choice of investment. Irrespective of your investment strategy or style, smart investors follow one simple rule, which is to diversify. Putting all your eggs in one basket, or in context, investing all your money into the same kind of stock or mutual fund can prove to be dangerous. The advantage with diversifying your investment portfolio enables you to manage your risks better and at times can help you offset any losses you might incur in other investments.

When it comes to diversifying your investment portfolio, the first things that comes to mind is mutual funds, stocks and bonds. To the average investor these might seem different, but there are subtle underlying factors that are common to all three and it would be naive if you would think you have a good diversified portfolio by investing in just mutual funds, stocks and bonds.

Alternative investment options, such as forex managed accounts is one investment product that should be considered. The reason why many investors hesitate to go ahead with a managed forex account is the large prevailing myth that you can end up losing your money or perhaps the managed forex account you deal with cannot be trusted much. Fact is that when speaking about losses, the same risks holds true whether you invest in a stock or in the bond markets.

Agreed, that investing in a managed forex account takes a bit more time and research compared to mutual funds or other relative products. The reason is because the other investment products are so common that it has become a large playing field for just about any investment company. When you look at the forex managed accounts landscape on the other hand, its still in its infancy, which could substantiate why it takes a bit more than usual when it comes to researching into a good forex managed account.

Forex is perhaps the largest financial market ever with stagerring numbers if you look closer and it is also one of the most volatile and dynamic markets. Within forex there are lot of sub categories such as commodities trading, indices and/or CFD's.

If you are looking to invest in a managed forex account, here is a great article to learn about the basics of investing in managed accounts in forex.

To conclude this article, we leave with some basic tips if you are considering a forex managed account investment.

Research into the forex managed account company. Its ideal that the company is legally registered and also take time to read through the terms and conditions.

Find out how much the minimum investment is required. Some managed accounts offer a low entry point of $2000 and upwards. However, the returns you see on such investments is quite low. On the other hand, this would minimize your risks and also give you time to evaluate on how your fund manager is operating.

Never give your money directly to the fund manager. The most safest route is to sign up with the forex broker your fund manager works with and to fund your own account. You can then sign the Limited Power of Attorney to authorize your fund manager to trade on your behalf.