subject: What To Be Concerned About In The Forex? [print this page] As the e-forex industry grows, more traders will consider managed accounts. Problems arise because of the track record say the former head of foreign exchange trading in the Asian region of a major financial institution who has managed billions of dollars in the forex market.
Always make sure you get an advisor with at least a three year audited track record or a verified profit and loss statement from a major bank. You might be lucky and get a leverage of 100 to 1 from your e-forex broker.
The standard fees for managed e-forex accounts are similar to other managed accounts. One will also have to pay 2% of the account balance per year for the management fee, a 20% incentive fee on new equity highs and a small transaction fee Learn about what questions to ask to a prospective money manager on how he will handle your e-forex account.
You want to ask about what percentages of trades occur during the day session. When the Asian session opens at 7 p.m. EST, Europe at 2 a.m. and the United States at 9:30 a.m. trade may be to your benefit. There are also advantages when it comes to not trading at all.
What percentage of the trades went down by more than 50% before recovering to break even or profits is the second thing you want to ask. When you use money managers with low drawdown is that you also have lower expected returns.
It is useful that you find out what intermarket indicators the money manager studies. In case the manager does not look into the dollar index, the major stocks exchange markets, gold and oil then you have to know why.
Be sure you know what the manager's worst trade has been. You might lose money instead of gain some if you work with a money manager that has no defensive skills.
Ascertain that you as how much of the profits the manager reinvests. Inquire if he normally redistributes money earned to another account. This helps lessens the risks you will have.
Sixth, ask what his strategy is for worst case scenarios. In the market there are times when accounts are not moving so much. Chances are you might need to rotate to new currency pairs.
Make sure you are aware of what return can you expect. Your manager is effective if they are able to answer your question. If he can accomplish the latter it is best to take care.
