Managed Forex Accounts – Pros and Cons

Deciding to make an investment into a managed Forex account can be difficult. This is a big decision as it is with any other investment you might make. One of the prime differences between this investment and others is the high use of leverage being used.

Basically, you are trading with money that has been borrowed and because of this the broker can and will interfere with any trades to protect its own entity. Once you make the decision, sign up for it, put funds into the account, and you are ready to go.

When you have decided you are ready to invest in the Forex market there are three types of accounts you can choose: standard, mini, and managed. Each has their pros and cons but it is you who has to decide which option is best for you.

1. The Standard account. This is the most common account. This account trades standard lot sizes which are for $100,000 per lot. Because of the leverage you will only have to put down $1,000 to place the trade but you will be controlling $100,000 worth of currency.

Pros Forex brokers will often times give extra benefits and services to this type of account. The potential gain is also the very high as you are investing a serious amount of money into each and every trade.

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 – The mini account lets you trade much smaller lot sizes. Each lot on the mini account is only $10,000.

Pros The risk – Because you can trade much smaller lot sizes the risk is lower. This is ideal for those who are new to trading the Forex. It can also allow for you to try out new trading ideas with much lower risk. Capital – The amount of money to open an account can be as small as $250.

Con Low reward – Because you are risking such a small amount of money then of course the potential gains will be much smaller.

3. Managed Account – The managed Forex account is different than the others. You allow your money to be traded by a professional trader in the hopes that he can do a better job than 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 – Many managed forex accounts have a minimum of $5,000 to $100,000 to invest. Fees – You must pay a percentage of your gains to the account manager. This fee can vary from 20% to 50% of the gains on the account

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.