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How Do Managed Forex Accounts Work?

Does getting involved in Forex sound like your type of risk? Do you thrive on the possibility to gain (or lose) thousands within a short time frame, but busy as you are, you don’t have time to monitor the Forex trading yourself?

Consider letting established brokerage firms do it for you by using a managed Forex account. Managed Forex accounts allow a brokerage firm to make investments on your behalf.

But your money will still be safe. Most brokerage firms only have limited power over your account. For instance, while a broker may trade for you, but he may not make withdrawals or deposit from your account.

While managed Forex accounts generally need a larger initial investment, the potential to gain more is higher. But don’t allow greed to blind to you to a few things you’ll need to know before signing on the dotted line.

Track Record

How long has this company been in business? Examine a website using the Who Is database. If the company claims to have been in business for ten years but the domain has just been registered recently, there’s reason to suspect unethical behavior.

Membership

Reputable companies are often members of Futures Commission Merchant (FCM), Commodity Futures Trading Commission (CFTC), and the National Futures Association (NFA). Search the Background Affiliation Status Information Center (BASIC) for further information on the track record of this company.

Returns

If this company offers unusually high returns, it might be a scam. You can always search for a company and the word scam to learn if it’s a well-known scam. Watch for red flags. Companies no one seems to have heard of, that claim to be “risk free” or invite you to gamble on your mortgage or retirement funds can be risky. Remember never to gamble on something you can’t afford to lose in the first place. Consider finding another brokerage firm.

Commission

How much is the commission? Will you pay a monthly fee? Many brokerage firms still charge a fee, even if you don’t gain anything that month.

Liquidity

Can you liquidate your account at any moment you choose to, regardless of the time of day or night?

Fine Print

The desire for quick cash causes many people to overlook this small but too often costly detail. Always read the fine print.

Finally, remember to look for a brokerage firm with experience and know-how in the Forex trading world.

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