Managed Forex Accounts - The Sure Means To Profit From Forex
Managed forex accounts have been around a long time
. They've been around since the advent of foreign currency as an asset class in itself. The concept of forex managed accounts just isn't new. They have existed within the areas of stocks, mutual funds, bonds and commodities for decades. In essence they're just flexible investment accounts run by a professional.
Nearly 99% of all traders lose cash on forex. But this is to be expected, especially when forex brokers are offering leverage of up to 500:1!
So, I will explain the lures, and dangers of leverage for you. This might be an eye opener to even some seasoned forex traders, and Im positive that for a few of the novice currency traders reading this, it'll be completely new material. So,lets imagine a newbie, would be, hot shot trader sees an advert for currency trading, where he can use 500:1 leverage. Hes thinking, Wow, great, who wants to be sensible, and invest their funds in a managed forex account, when they can take several risks, take a gamble, and quadruple my money with every trade. They're already doing the maths. With just a $1000 account, they can trade $50 a pip. So, for every 20 pip trade, they make a $1000. Wow! On average, the daily range of say EUR/USD is over 100 pips. And thats just one pair, what if I traded 5, 6 or even much more currency pairs? So, lets say I make 5 trades a day - thats a 500% profit per day. So thats $5,000 on Monday, $25,000 on Tuesday, $125,000 on Wednesday, $625,000 on Thursday, by the end of the trading week on Friday, hes got over $3,000,000 within the bank, and he can retire.
I dont think this is such a distinctive though method to have. Even so, for most people today, once they have finished dabbling inside the markets themselves, they obtain a reputable managed forex account to give themselves access to the lucrative world of forex trading. But in a similar vein, the leverage may also trigger huge troubles for a currency trader.. The spreads will cause you a huge drawdown, and with a volatile currency, as most are, and you are able to blow your account in several short, but costly, minutes!.
And so this is the honest rationale why forex investments have turn out to be so popular - the greed of so numerous traders who think they can beat the system, to make millions where the masses have failed. To find the elusive magic wand of forex trading. But reality sets in after heavy losses, and most move on to invest in a very simple managed forex account.
At the end of the day, the only way to guarantee you have a chance at profiting from the forex market would be to leave it to a pro, and invest in a managed forex account. After all, you wouldn't wire your own home to save paying an electrician?
It is of paramount importance that an investor carries out their due diligence very first, for example seeing detailed account statements, doing a background check on the forex fund manager etc.
As a result, we can see that trading within the foreign currency arena is fraught with difficulties, and you are a lot advised to research a well run managed forex account. Whilst you can give some credit to these people today for attempting, it's nearly always additional profitable to invest in a correctly run managed forex investment.
by: Steve Shane
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