A Beginners Guide To Trading Forex

Forex Trading Easier Way 1.

Easier Way #1 – Managed Accounts

Managed accounts can present an attractive opportunity for people who want to make money from the currency trading markets but cannot or do not want to learn to trade for themselves. With a managed account you do not have to do any trading at all. Instead, you entrust your fund to the management company who will act for you.

Most managed accounts require a large minimum deposit. Around $25,000 is common. If that is within your means, you need to be aware of the difference between the two main types of managed accounts that you may find.

Standard managed accounts

With this type of account, your money is kept in your brokerage account inyour own name and the manager simply has access to your account so that they can trade with it. You can see how much is there and how it is doing at any time. You can make whatever withdrawals you want. It is always your money.

You have to accept that even skilled account managers cannot predict the markets 100% and you may have to take some losses. Still, if you are a beginner, they are likely to do better with your money than you would yourself, so it is just a question of whether they can do well enough to cover their fees and make you a good profit.

Pooled accounts

Pooled accounts are more risky because there is a greater possibility of fraud. Here, your money goes into a pool held by the account manager. You are paid a share of their declared profits. In theory the pool provides a buffer so that profits and losses are more evenly spread and your income should be a little more predictable than when your money is being managed separately. Costs should be lower too.

The problem is that you cannot really know what is happening and an unscrupulous management company could simply be making small regular payments to keep their customers happy while illegally diverting the bulk of your funds into their own pockets. Of course there are some well run pooled accounts. However, you should research a company offering pooled accounts very carefully before you decide to invest.

Even if you choose a standard account, you need to do your due diligence. Check the company’s incorporation, their history and trading record. Try to avoid managers who insist on you signing up with their preferred broker. That usually means that they get a commission on all your trades, so they have an incentive to use a strategy that will increase the broker’s earnings and their own commission rake-off, even if that is not the most profitable for you.

It is better to sign up with a company who will let you choose your own broker, even if they charge a slightly higher fee.


Next Page: Forex Trading Easier Way 2


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