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.

Want to trade forex online? Important tips to bear in mind

Most of us want to trade forex online. It could be for many reasons. Some like to trade forex simply because love to play with the financial markets. Others see forex as a way of alternative investment. Whatever your reasons may be, here are some important tips to bear in mind even before you start trading or investing in forex.

Currency markets and the movers and shakers

Ask a seasoned forex trader on how they divide their time trading forex and the most obvious answer you get is the amount of time they use in order to analyze the markets and looking out for economic news and developments. These are two of the most important factors that tend to directly influence the economy of country and thus impact the currency’s value as well.

When you have a good understanding of the market movers and the news that you need to follow, it would be as obvious as looking into the various signs that forecast how the currency prices will move.

Because the value of a currency is directly tied to a country’s economy, factors such as political stability, economic strength and to some extent even the geographical factors such as weather tend to influence the prices. It is little wonder why, that so many experienced forex traders tend to spend more time into analyzing and reading the charts. This basically prepares them for upcoming trends or price falls and thus such traders manage to fare better than those who just trade blindly on gut feel.

Tools and tips for analyzing forex markets

There are many ways for traders to get started in analyzing the forex markets. One specific tool that is a ‘must have’ in every forex trader’s arsenal is the forex economic calendar. The economic calendar is nothing but a list of events scheduled for the day or the week or month, depending on how you wish to see it. Traders usually prefer the weekly charts, if they are weekend strategy planners or perhaps the daily chart which gives details on the day’s upcoming economic events.

Most of the events usually carry the currency that will be affected, time of the release and the release website. Other critical information also includes previous performance and the market expected data. Traders, especially forex scalpers find it very beneficial to use the economic calendar as it can help them to prepare their forex scalping strategy.

Risk management is another important factor that we will touch upon. A wise trader usually places their traders in a way that they limit their risks. This can include, using only a small part of their invested capital to using trailing stops and setting up the stop loss and take profit levels. All of these combined basically are targeted towards building a safety net for the trader in the event the markets do a reversal and the prices go against your trades.

It is always good to focus on a single currency pair instead of trading 3 or 4 pairs at a time. This helps you to retain your focus and also pick any signals you might see from the market events. Looking at charts for a currency pair and how it has been performing in the past few days is a good indicator on how things stand and can help the trader to gain context in this aspect.

The above tips are just tip of the iceberg and indeed volumes can be written about the many important tips for forex traders. However, the key is to start slow and steady and always look for long term gains instead of chasing the short term profits, which might seem big enough to give it a chase. In forex, people fail because either they are too greedy or do not follow a trading strategy, let alone having a goal.

This article is aimed towards beginners in forex who want to make the right start.