Managed forex funds are not the same as individually managed forex accounts. While it is possible that we may find a suitable opportunity to review, there’s one difference between Managed Forex Funds and Managed Forex Accounts. The technical definition of a fund refers to pooled capital from several investors. Most programs at The Review are individual managed forex accounts. The managers trade each forex client’s account separately. Your funds are kept in your own broker account. Your money is not co-mingled with anyone else’s money.

You never send any money to the managers in our directory. You open your own account with the broker directly and then sign a Power Of Attorney which gives your manager “trading rights” to your account. The manager cannot withdraw a penny from your account, ever.

The account is yours, at your broker’s. You will have real-time access to view your account balance and trading activity.

Note that some brokers do regular maintenance from Friday night until Sunday. This is normal and for your benefit. During these times you may not be able to access your account or specific information concerning your account.

Managed Forex Funds: A Different Animal.

Unlike managed forex funds, where virtually all of your balance is traded, managed forex accounts generally do not trade your full balance UNLESS they are using extremely low leverage, such as 1:1.

Past performance of managed forex accounts drive investment decisions not only with funds, annuities, or stocks, but sometimes with money managers as well. However, with Individually Managed Accounts (IMAs), you will know directly from the forex money manager or your advisor all the pertinent information about the portfolio in terms of who is managing the portfolio, what forex pairs are being traded, current prices of the currencies relative to your home currency, volatility, short and long term forex trends and so forth. Determine, with regard to your forex portfolio, what you will need in the future to manage your children’s college education, purchase your home, save for vacations, or plan for your retirement.

Individually managed forex accounts are usually traded by professionals in return for trading commissions and performance fees. Some accounts, such as the Arbitrage forex account, does not charge trading commissions. This increases the yield on extremely small margins.

There are many advantages to managed forex accounts, vs. managed forex funds. The most significant of course is that you get professional investment management designed specifically for your financial needs and goals. Unlike mutual funds, which are pools of assets over which you actually own shares in a mutual company, an individually managed account lets you directly own the funds in your portfolio.

For decades, and until recently, the idea of having your own professional private forex trader seemed out of reach for the average investor. In the 1920s and 1930s wealthy families like the Carnegies, the Mellons, and the Roosevelts employed professional money managers to manage their family’s portfolios of stocks, bonds and real estate. Later, in the 1950s and 1960s, large state and corporate pension plans began to turn their assets over to professional managers. The reason that these high end professional money management firms were unavailable to the average investor until recently is because of the high minimums. The minimum account sizes that the top money management firms were willing to accept until recently was often as high as $10 to $20 million per account! Recent advances in technology and lowered minimum investment requirements and have now brought individually managed forex accounts within the reach of millions of new investors. Managed forex accounts list you the opportunity to increase your net returns with effective tax management strategies developed by professional money managers working to meet your specific personal goals.

Forex Manager’s Fees

As a general rule in managed forex accounts, it is common to charge a performance fee. In a managed forex account, performance fees are based on the HIGH WATER MARK CALCULATION. For example a client opens a forex account with an initial deposit of $50,000. Assume that the profit commission is set at 30%. At the end of the first month, the balance on the account has grown to $52,000. The first month’s fee paid to the forex manager will be $600. This is calculated by taking the forex trading profits of $2,000 and multiplying them by 30%. We subtract the $600 from the $52,000 balance to get a HIGH WATERMARK of $51,400 (or $52,000 – $600).

On the second month of forex trading, the ending balance on the account is $49,000. No performance fee is paid, and the high water mark remains $51,400. This example assumes that there were no new deposits (which increase the high water mark) or new withdrawals (which decrease the high water mark). In almost all cases the brokers are compensated for their services through the spread between the bid/ask prices. Some brokers (for example, Interactive Brokers) charge commissions per trade, but at the same time the spread in their forex pairs is lower than competing brokers.

Alternatives to Managed Forex Funds

Trading forex is an extremely difficult process. For this reason you see few forex funds and forex managers. As this article demonstrates, there is a difference between a forex fund and a managed forex account. The latter is under your control and ownership. A large percentage of clients of managed forex accounts have a great deal of experience in losing money by trading forex themselves! So if you are new to forex it is to your advantage to invest with a creditable forex account manager. This is our specialty.