Unlike mutual funds or other common investment options for the stock market, Forex managed accounts and Forex managed funds are yet to gain popularity among investors. The world of Forex trading was only available to a small group of professionals until 10 – 15 years ago, after which retail Forex trading started to rise in fame through online trading platforms.
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The Forex market is surrounded by many myths and misconceptions and when it comes to Forex managed accounts this is even more apparent. Here, in this article we are going to look at some of the common myths on Forex managed account and explain why they are not true.
You need a lot of money to invest into one
If you looked at some of the investment options through a Forex managed account you would already this is not the case. While yes, certainly there are high-end investment firms like big hedge funds that will not take anything less than several millions of dollars, the truth is there are many affordable options for ordinary people as well.
You just need to spend some time online looking for the best solution for you. There are many good traders that are in the beginning of their careers and they will take rather small investments to get started, yet they can produce very good returns. And as an added benefit they may even charge very low fees and commissions.
For investors with lower investment capital looking for such options would be better. If you want the proven and the best money manager on Wall Street, of course, you can’t afford him because he takes 60% in commissions on generated profits and requires a minimum investment amount of 1 million dollars.
At the end of the day, it’s all about finding something that works for you.
Forex managed accounts are scam
This is obviously not the case, although, of course, scams do exist just like in any business. So, a common sense cautiousness would help you greatly in generally avoiding scams, not just for your Forex investments.
What do I mean by common sense cautiousness?
Things like overly pushy call agents, offers that are too good to be true and crazy promises could but are not necessarily signs of a scam.
Like with any investment, you will need to do your homework and investigate fully the available options you have in front of you.
Really, for the most part, scams are rare and most Forex managed accounts are legit. However, scams are not the only thing you may suffer from. A Forex managed account should produce some profits for you and we know that profits don’t come easily. So, your bigger concern I think is finding a money manager that is really good and at the same time affordable for you.
Investing in Forex is too risky
The truth is investing in Forex can be very risky or it can be a very low-risk investment, of course, depending on your approach to the market. Just like with other markets there are high-risk and low –risk strategies.
However, in comparison, risk in the Forex market can be better managed than in other markets. And this has to do with the generally low volatility of the Forex market on a day to day basis. While a stock could quadruple in price over a short period of time, we have yet to see a major currency pair do that in decades.
The Forex market is different than the other markets, and as such naturally it carries a set of unique pros and cons .
The fluctuations in the foreign exchange market are totally random, therefore trading Forex is like gambling
Hah, if this was true we would all have been beggars in the street right now.
There are traders who continuously ride the Forex trends from start to finish, every time.
So, the notion that currency moves are random is totally incorrect and misleading. In fact, a lot of times you are better off investing in a Forex managed account than in an equities mutual fund. Or, if you want to diversify you can invest in both.
Point is, currency moves are very predictable and they are driven by fundamental factors we are well aware of, which repeat time after time.
You need knowledge and experience to invest in a Forex managed account
Certainly, it will be helpful if you have some knowledge or experience with the foreign exchange market or investing in general, but you don’t need to. In fact, that is the point of managed accounts.
After all, you hire other people to trade your capital for you, so you don’t have to know much about the market. Or to put it better, you don’t need to know anything about the markets or investing.
However, you need to be aware of all the risks involved and how any profits will be distributed to you. In other words, you do need to understand how Forex managed accounts work a bit so you can better make you choices.
So, at the end, don’t let rumors that may or may not be true stop you from taking charge of your financial future by investing in great available options. In investing, everything needs to be double-checked before making any conclusions or decisions, because the consequences of bad judgement in this business can be very serious.
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