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.
Once you have decided and are ready to start there are three types of accounts you can get into: standard, mini, and managed. They each have their ups and downs and it is up to you to figure out which one is right for you.
1. Standard. This account is the most used type of account. You will be trading lots equal to $100,000 per trade. With leverage you will not actually be putting up this much money but that is the amount used in the trade. Typically you will have to put up $1,000 per lot to place the trade.
Pros Service - Many brokers will give perks and service to investors who choose this option as you are investing more money. Gains - possible profits in this type of account are much higher because of the high amount invested.
Cons Capital - Their is a much higher requirement of capital to open an account as you will be trading large size trades. Losses - Because of the larger size of each trade your potential losses are also great just like the possible gains.
2. Mini - This account allows money to be moved in blocks or lots. The mini lot is roughly $10,000.
Pros Risk is low - Since you trade in blocks of $10,000 traders who have no experience can trade without going through the entire amount. Those who have experience can test new strategies out. Requirement Capital is low - the account can be opened with as little as $250 through $500.
Con Reward is low - when you don't risk much you don't get much. This is a type of account for those beginning in the market.
3. Managed - A managed Forex account is where the capital in your account is yours but you do not have the decisions to buy or sell. Professional traders will place the trades for you.
Pro Pro trader - You will have an experienced trader who will be making the trading decisions for you. This means you do not have to watch the market all the time.
Cons Capital Requirement - Each managed forex account will have a minimum amount required to invest which can range from $5,000 to $100,000. Fees - You will have to pay a percentage of your gains each month to the account manager and this can range from 20% to 50%.
Be sure to do lots of research before making a final choice. It is up to you to figure out which option best fits your needs. It is your money and the final decision is yours.
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.
Once you have decided and are ready to start there are three types of accounts you can get into: standard, mini, and managed. They each have their ups and downs and it is up to you to figure out which one is right for you.
1. Standard. This account is the most used type of account. You will be trading lots equal to $100,000 per trade. With leverage you will not actually be putting up this much money but that is the amount used in the trade. Typically you will have to put up $1,000 per lot to place the trade.
Pros Service - Many brokers will give perks and service to investors who choose this option as you are investing more money. Gains - possible profits in this type of account are much higher because of the high amount invested.
Cons Capital - Their is a much higher requirement of capital to open an account as you will be trading large size trades. Losses - Because of the larger size of each trade your potential losses are also great just like the possible gains.
2. Mini - This account allows money to be moved in blocks or lots. The mini lot is roughly $10,000.
Pros Risk is low - Since you trade in blocks of $10,000 traders who have no experience can trade without going through the entire amount. Those who have experience can test new strategies out. Requirement Capital is low - the account can be opened with as little as $250 through $500.
Con Reward is low - when you don't risk much you don't get much. This is a type of account for those beginning in the market.
3. Managed - A managed Forex account is where the capital in your account is yours but you do not have the decisions to buy or sell. Professional traders will place the trades for you.
Pro Pro trader - You will have an experienced trader who will be making the trading decisions for you. This means you do not have to watch the market all the time.
Cons Capital Requirement - Each managed forex account will have a minimum amount required to invest which can range from $5,000 to $100,000. Fees - You will have to pay a percentage of your gains each month to the account manager and this can range from 20% to 50%.
Be sure to do lots of research before making a final choice. It is up to you to figure out which option best fits your needs. It is your money and the final decision is yours.
About the Author:
Ryan shows you how to make profitable forex investments with a managed forex account.
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