Is Forex Managed Money a Good Idea?

Managed Money is a much more common phenomenon in other areas of investing than Forex, but some companies offer this service, as well. Managed money is any means of investment where the investor decides to place their money in an investment fund that is handled by a professional or professional company instead of making their own choices in investments.

In theory, by having a professional handle the account you are more likely to see better profits result.

One of the best examples of managed money is a mutual fund. While managed money is much less common in the Forex, some professional firms still offer it. Most of the time the firm will have an account in your name, and then they will make all the trades for you.

They can do this through various agreements, basically a limited power of attorney that lets them trade that money in that account for you.

The investment firm makes a small amount of money on the bid/ask spread (this is normal for managed Forex accounts) and then most take a certain percentage of the profit made at the end of each month, anywhere from 15-40%.

This does give the company incentive to make sure you do well, since the more profit you make, the bigger a cut they get. The reverse is also true: if you don't make any profit, neither do they.

Most of these firms will have their own policies and paperwork to fill out in order to set up a Forex managed money account. Accounts should be available via Internet so the investor can see what trades are being made and what the results and account balance is. You should also receive the traditional paper statements via snail mail.

All accounts should also have some sort of stop loss to make sure that even if they take a beating, you're not in danger of losing all your money.

If you decide to use a Forex managed money account, you will not be able to trade yourself off that account. The entire point of having your money managed is trusting professionals to make the right transactions in order to gain you a larger profit than you would be capable of managing on your own.

Most of these accounts will have a minimum amount of deposit, often times at the $10,000 range or even higher. You will have to check out each individual investment firm to figure out what the minimum amounts are.

Managed money is one way to go, but it's still no guarantee of profit. If this is the direction you want to go, make sure to do your homework to end up with a reputable investing firm you can trust. Otherwise, look for a trading system that works and see if you can do it yourself. Everyone who trades profitably needs a successful system, so if they're just following a system - why not do it yourself?

Then you can keep that extra 30% profit, not too shabby at all!

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What is the Forex Market?

The Forex market, established in 1971, was created when floating exchange rates started to materialize. It relates to the foreign exchange market, where brokerage firms and banks are linked over an electronic network that allows them to exchange the currencies of countries around the globe. The Forex market is not centralized, like in currency, futures or stock markets. Trading occurs over computers and phones at thousands of locations globally.

The Foreign Exchange market, usually referred as forex, is where banks, capitalists and speculators exchange one currency to another. The largest foreign exchange activity retains the spot exchange among five major currencies: US Dollar, British Pound, Japanese Yen, Eurodollar and the Swiss Franc. It is also the biggest financial market in the world. In comparison, the US stock market may trade $10 billion in one day, whereas the Forex market will trade up to $2 trillion in one single day. The Forex market is an opened 24 hours a day market where the primary market for currencies is the 24-hour Interbank market. This market follows the sun around the world, moving from the major banking centers of the United States to Australia and New Zealand to the Far East, to Europe and ultimately back to the Unites States.

There are three main causes to participate in the Forex market. One is to facilitate an actual transaction, whereby international corporations convert profits made in foreign currencies into their domestic currency. Corporate treasurers have their own forex trading strategies so they also get into the Forex market in order to hedge against undesirable exposure to future price movements in the currency market. The third and more popular reason is speculation for profit. In fact, today it is estimated that less than 5% of all trading on the Forex market is actually helping a true commercial transaction.

Forex trading system views forex market as an Over the Counter (OTC) or Interbank' market, due to the fact that transactions are carried on between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets. In this big forex trading system forex trading
starts each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can react to currency fluctuations caused by economic, social and political consequences at the time they occur - day or night.

So far, professional traders from major international commercial and investment banks have ruled the Forex market. Other market participants range from large multinational corporations, global money managers, registered dealers, international money brokers, and futures and options traders, to private speculators. The Forex market is called an Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes big multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.

Forex trading system is the biggest financial market in the world, with a daily average turnover of approximately US$1.2 trillion. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen. Approximately 80% of all Forex trades close seven days or less and more than 40% last fewer than two days. As a universal rule, a position is kept open until one of the following occurs: realization of enough profits from a position, the specified stop-loss is triggered, another position that has a better potential appears and you require these funds.

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