After reading through a few managed forex articles, you may be saying to yourself, “This is pretty exciting, but is a managed forex account really right for me”? Well, as we will explain, the answer depends completely on you.

As we all know, there is not a single thing that exists in the world which can meet the needs of everyone. Though it goes without saying, this is also true in the alternative investment world. Despite what many biased investment managers may say, portfolio customization is what leads to success, not a “one size fits all approach”.  The fact is, people have different investment preferences, goals, and risk tolerances, and they must address these FIRST before making decisions.

To help our readers avoid pitfalls and make decisions that match their goals, we will explain what type of investor is right for managed forex, while also listing characteristics that MUST be present for those considering FX investments.

To get started, let’s take a look below at some of the top qualities one must possess to invest with a managed forex trader.

Top Qualities of a Managed Forex Investor

1.  High Net Worth:  Most investors who open managed forex accounts have a net worth exceeding 1M, but that is not always the case.  Though there are forex investments that start as low as 10K, most of the time they’re unlicensed and higher in risk.  In our opinion, you can test the waters with small amounts of capital, but your best decision would be to find a licensed managed forex trader, and invest at least 100K to start.  The fact is, by starting with less money, you actually have a higher chance of losing it, since smaller accounts are harder to manage.

2.  Strong Risk Tolerance:   If you are considering managed forex, you must understand that there will be some months that are up, and some that are down. For example, if you invested with a good forex trader, yields could look like this over the course of six months: 12%, 5%, -9%, 22%, -1%, 11%.  Despite the fact that you had two negative months, you are still up over 50%, and can benefit from compounding every time you profit.  Though this is a rather normal type of fluctuation, you must also keep in mind that account values can be far more volatile with certain forex traders. Before investing, always assess the trader’s strategy, and decide if the risk is worth the prospective reward.

3.  Understands Forex Trading:  You don’t have to be a trader to invest in managed forex, but you will only benefit from learning.  The difference between investors who have average success in managed forex and those who become rich is one thing, education. If you understand what strategies exist in forex, and know how to implement them, you have a far better chance of finding the right trader during your search.  If you are really serious about managed forex, take a few hours a week and study the topic, it will be well worth your time.

4.  Possesses Diligence and Realism:  If you are pursuing managed forex investments for the high yields, then welcome to the club. Though we all enjoy the unparalleled opportunity for profit, you must remember, in forex safety is always first!!!  If you are a beginner in forex, invest a small amount of capital with a licensed conservative trader, and gain a stomach for it first. Once you get comfortable and gain more experience, you can start to look into higher yielding managed forex investments.  Though it may seem exciting to chase high yields, remember, slow and steady wins the marathon!

5.  Must be Calm and Collected:  If you are the type of investor that likes to check their balance EVERY single morning, than managed forex may not be right for you. Even if you understand the natural daily fluctuations in account value, you will drive yourself crazy by watching it go up and down. Instead, just go relax and enjoy life, you only need to check your account balance once every week, month, or even year with a good trader.

If you are someone with most of these qualities, then managed forex may be a good investment market to explore. In fact, if you find the right trader, forex can be the key to meeting or exceeding your financial goals.

In contrast, if you do not possess these qualities, then managed forex may not be the best choice for you.  If you lack the appropriate characteristics, and choose to invest in forex anyway, you are testing fate.

Though managed forex can assist almost anyone to diversify their portfolio, like all alternative investments, it is best for those who meet the requirements.  Given the recent growth of the FX market, and the frequent failure of many forex traders, the requirements we have listed above couldn’t be more important.  Even though managed forex may be the investment market with the highest yields, remember, it is also the one market that you can “lose your shirt” in overnight.

To briefly summarize, if you have the money and interest, then managed forex could be a great fit for you! If not, then revisit the opportunity when you do.  Let’s face it, nothing could be worse than dealing with a mistake which you know you shouldn’t have made in the first place.

InsideTrade LLC Staff
(412) 235-2855