What to Expect

When You Open A Managed Account

Brokers and Account Managers attempt to make the account opening process as easy as possible. Even so, there’s “paperwork” to be done. Initially you’ll be completing forms and sending proof of ID to the broker. Once your account is approved, you’ll fund the account. You will also sign a LPOA (Limited Power of Attorney) which authorizes the account manager to make trades on your behalf.

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The account manager cannot transfer or have access to your funds. Rather, your account is “mapped” to follow the trades made by the manager. Your funds remain in your name. You can ask the manager or broker to stop trading at any time. Be advised however that brokers have varying policies and systems for managed accounts. Some brokers ONLY “map” or “unmap” accounts at specific times, for example, on Friday afternoons. If you have concerns about this procedure you should ask the broker.

How A Forex Account Grows

Forex is extremely difficult to trade profitably, consistently. This is why good account managers are rare. The difficulty arises because a currency’s price is affected by so many forces: a country’s economy, it’s trade balance, its relationship with other countries, employment data, interest rates, sentiment, and other variables

We’ve created the animations below to illustrate the difference between the expectations of a “perfect world” and the more typical experience of the “real world” of managed accounts:

If you are investing in a Managed Account for the first time, you may well become fascinated with the moment to moment balance of your account. We created the animations above to illustrate the difference between a smooth, consistent return (such as in a certificate of deposit or other interest bearing account) and the more erratic behavior one may experience in a managed forex account.

If you’ve never invested in a forex account before, it will be helpful to watch these animations. Both accounts wind up with a $2,000 balance. The way they get there of course, is the difference between a perfect world and the real world!