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How to choose the provider of Forex managed accounts


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I suggest you to focus on a few basic characteristics which you can find on each providers website. These are the basic indicators that suitable providers of managed accounts should provide.

  • Diversification and trading systems used
  • Money and Risk Management
  • Equity curve shape
  • Historical results
  • The amount of required capital and profit distribution

Diversification and trading systems used

Diversification is to have your managed account traded by more then one trader with a single trading system. Of course, it is possible to find a trader with an excellent and very robust trading system that is consistently profitable, but it may be a very demanding task. But even the most robust trading system has its weak period, which may be very well balanced by distribution of the portfolio. The most ideal case is where forex managed accounts provider has a portfolio of traders with trading systems that are not only robust, but are built on different rules, and their results with each other are not correlated (not reported particular type of dependency).

My personal advice is this. Do not go into business systems, using martingale strategy (extending a trading positions while market is going against you). Although such systems are profitable, but sooner or later a situation arises when it clears your account. Unfortunately, no one knows in advance when it will be. If a similar disaster, like happend recently in Japan occure, the market is running in one direction and you can say good bye to your money.

Money and risk management

I will not be writing about concrete ways and methods of management position sizing. Anyway, if your account will manage Money manager, who will also provide diversification to a portfolio, Money management of individual traders in the system must confirm that it is managed by more than one trader. This means that Size of starting positions should be adequate to amount of traders in the portfolio.

Good Money Manager (provider) of managed forex account should use a risk management of trading systems for preventing of any failures of trading systems and also prevent draw down on your business account. It can be done several ways, which indicates when to turn your system off, until it starts showing possitive results again.

Equity curve shape

It looks like primitive method, but you can learn loads from equity curve. Ideal equity curve should be the least volatile and present regular and stable growth of capital without bigger drawdowns. Of course losses are expected when trading, but at first glance on equity curve we'll see whether its increasing or it consistently oscillates up and down very volatile. This is a question for you, whether you are willing to accept such fluctuations in income or prefer consistent capital appreciation, without the big fluctuations.

Historical results

It is one of the most important data available to you. Of course, “past returns are no guarantee of future returns", but you have other stronger foothold. If the trading systems used by your money manager are really robust, it is a big assumption that they'll be functioning like now in the future. In the worst case, as I mentioned in the section on risk management, if trading systems stop making profit Money Manager will shut them off until they recover, or replace them by others.

You have to count with potential yield and the risk - respectively potential draw down. This matter is associated with position sizing and diversification of the portfolio and that a good manager knows how to operate this systems to achieve optimum profits with low risk.

The amount of required capital and profit distribution

The amount of required capital and profit distribution for each provider of forex managed accounts it's different. It's up to you how much funds you have available or how much you can afford to invest. However, it should be a minimum deposit of $ 10,000. Standard commission for Money Manager is somewhere around 35%. Of course for large amounts it can be negotiated for lower commission for Money manager, but it only amounts to manage hundreds of thousands in dollars. Some traders want to share a 50/50 and a they will accept lower commission than 50% in case of excess of $ 100k.

I think that 35% performance fee may be very acceptable number, especially if the Money Manager will be safe and he will be increasing your capital with Interesting percentage.


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