Monday, September 17, 2007

A Managed Forex Account Can be Advantageous

Forex (foreign exchange) is a highly specialized form of day trading that deals in the worlds many currencies. To begin trading, a player needs to open an account, choose a trading platform and a reputable broker. Forex brokers offer clients several ways to invest, including a managed forex account.

A managed forex account allows the client to authorize the broke to execute trades on the forex marker. Having a knowledgeable broker handling the transactions can be advantageous. Forex is speculative, with potential for huge profits and, of course, incredible losses. In addition, forex has no central exchange, but is traded over the counter (OTC) via the interbank. Trading centers in New York, London, Sydney and Tokyo make it a global, 24-hour market as well.

Many forex investors are not able to watch the market 24 hours a day. Others simply do not have the desire or the background to keep watch. In the forex market, though, that 24-hour watchdog capability is essential for success. Obtaining and instantly acting upon new information is also essential, which is difficult not only for newcomers to the market, but also for most busy investors. A managed forex account is perfect for such investors, those with risk capital who do not necessarily want, or know how to trade on their own.

In addition to handling the transactions, a managed forex account provides several other benefits. Compared to more traditional account like equities and real estate, a managed forex account requires a lower minimum investment. In addition, the clients money is always available. No lock-up period exists, so the investor can withdraw the balance at any time. Better timing is a great benefit of a managed account. Forex trading is all about time: when to buy, when to sell, when to bet the pot and when to fold. The professionals have access to the latest information on multiple markets, so have greater resources to affect a trade.

A managed forex account can also be advantageous for the traditional investor who seeks diversification of his portfolio. Traditional investments, such as real estate, equities and fixed income tend to be cyclical in nature. Trading on the forex market gives the classical trader an opportunity to make money regardless of the status of the stock market. Unlike equity and fixed income managers, a managed forex account trader can use both long and short positions equally. In forex trading, no difference exists in the profit potential between the two positions. Forex, therefore, is not biased long, but capable of profiting under any market condition. In addition, a professional forex account manager can process information on the fly and take advantage of opportunities as they arise.

Regardless of the level of involvement, an investor wants when choosing a managed forex account, he/she must do some research on the industry to be successful. Brokers can vary in services offered, but they must be registered with the Futures Commission Merchant (FCM), and be backed by a reliable lending institution. Bottom line: The managed forex account must be held accountable.

Are you interested in learning about the Forex Trading System? Our site provides plenty of useful information regarding Forex Trading. by T.D. Houser