Managed Forex Trading Account
What is a managed forex account? Well this is where you open a forex trading account and someone else trades the account for you. They are trading your money. They do not have access to the money so they cannot steal or get at your money but they can earn a lot or lose a lot of your money for you. In most cases the investor (the one with the money) only watches to see what is going on in their account but they do not do any of the trading.
There are usually two passwords available for your account. One password is for the trader to log in and place orders. The 2nd password is for the investor to log into the account and see what is going on.
There are managed accounts that do well and others that do not do quite as good. When account managers show potential clients how well they have done you need to look for some losses in the account they are showing. If you only see winning trades and no losing trades then something is wrong.
Even the best trading system and best traders will lose sometimes. So one question to ask is where are the losses? One scenario is that only the winning trades have been closed. The losing trades remain open which gives a false representation of what the account has actually done.
By closing only the winning trades the account balance will grow. This is deceiving because the equity, which is the real amount of money in the account, keeps going down. The account equity is the account balance minus the negative open trades and plus the positive open trades.
Also, a margin level percent is shown on the account. The higher the margin level percent the better shape the account is in. This percent is figured by dividing the used margin into the equity. This will give you a percent, when you move the decimal place over two to the right. Most trading platforms are set to close the largest open negative trade when the margin level percent reaches 50%. This is to keep the account from going below zero and which would then put the investor in a position of owing the brokerage firm money. This is called going into a margin call.
As you can see, it is a good idea to understand the concepts of trading so that you can know how to find good, honest money managers to manage your forex account. Be smart and do your homework when choosing a currency trader to manage your forex account.
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