Managed Forex What are The Pros and Cons ~ forex h4 trading system
The decision to invest in a managed Forex account can be a difficult one. This is a significant decision just like any investment you might make. The big difference in this investment compared to others is the leverage used.
The leverage is actually borrowed money that the broker has given you. Because you are borrowing money you give them the right to close any trade as they need to protect themselves. If you agree to this then sign up and start trading.
If you have made the decision to invest in the Forex market then there are three different accounts you can invest into: standard, mini, and managed. Each option has both pros and cons and it will be up to you to decide which account is best for your needs.
1. Standard. This type of account is the most common. Basically you have access to a major amount of currency. The worth is $100,000. You do not have to put the $100,000 down in order to do trading. Basically, you need $1,000 in the account for t his to work.
Pros Forex brokers will often times give extra benefits and services to this type of account. The potential gain is also the very high as you are investing a serious amount of money into each and every trade.
Cons Capital Requirement - Most brokers would require you to have a starting balance of at least $2,000 and others more than that. Potential to Lose - Just like you could make $1,000 a day, you could also lose that $1,000 in a day.
2. Mini - This account allows money to be moved in blocks or lots. The mini lot is roughly $10,000.
Pros Risk - The risk is much lower because you are using such smaller lot sizes. This is great for who have little to no experience trading the forex market. It also allows for you to test out trading strategies with less risk. Capital required - The amount to start an account can be as little as $250.
Con Low reward - Because you are risking such a small amount of money then of course the potential gains will be much smaller.
3. Managed Account - The managed Forex account is different than the others. You allow your money to be traded by a professional trader in the hopes that he can do a better job than you.
Pro Professional trader - A trader with years of experience will be trading your account giving you more time as you will not have to constantly watch the market.
Cons Fees - You will be required to pay a fee of 20% to 50% of all the gains made on the account each month. Capital - Most managed accounts will have a minimum investment amount of $5,000 to as much as $100,000.
It is always wise to research as much as possible to see which option best fits your needs. Always remember it is your money and you have to be the one watching over it.
By Ryan D. Moxie
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