Discover Secrets To Evaluating An Account Forex Managed
Discover Secrets To Evaluating An Account Forex Managed
An account forex managed is a good way for an investor to diversify his portfolio. After the crash of 2008 many investors are looking for ways to balance their portfolios. In 2008 the prices of all assets collapsed at the same time. Investors are seeking new solutions to balance portfolios. Currencies make the perfect choice as they are less volatile than other assets. I have included in the following paragraphs several methods to rate the forex funds.
How To Evaluate An Account Forex Managed
Annual ReturnYou can see the different monthly return rates and miss the overall important figure for the annual return. You need to be happy with the annual return rate.Average Win / LossThere is any old trading rule that your winners should be twice as profitable as your losses. The average win should typically be two times as big as the average loss.Max Peak to ValleyWe have to see what the maximum draw down is and if we could live with the consequences. Some experienced traders can experience a draw down of 30% as they recognise that this is the nature of the system. Some people would be horrified to see a draw down of 30%.Correlation with S&PIf a large proportion of your money is in the stock market it can pay to have a strong negative correlation with the S&P. If the stock market goes down, it is then likely that your investment will increase. This will help to balance your portfolio.SlippageThe results from a lot of systems do not take account of slippage. This is very important if you are trying to trade this system yourself or automatically. You may not be able to get into the marketplace as the original system because of timing differences. You could have different brokers than the original system.Sharpe RatioThe sharpe ratio is a way of measuring the risk premium. Typically we want to compare the performance of the fund against a risk-free investment. The higher the sharpe ratio the less risk there is in the investment. We have to take care with the inputs for this ratio. For instance a with profits fund will have a superior sharpe ratio since the profits are reinvested every year. Our nation really compare the performance of the fund in the year without any profits reinvested.
There are a number of methods to rate the performance of an account forex managed fund or system. We should try and demo trade or take a trial for a period of time. It might also be helpful if we could get some testimonials from customers.