The forex market is a kind of market in which market participants can buy, exchange, sell, and speculate on different pairs currencies. The forex market is composed of commercial companies, hedge funds, retail forex brokers, central banks , investment management and investors. The Forex market is considered to be the biggest financial market with daily transactions of more than $5 trillion which is more than the futures and equity markets combined.This means forex market offers a huge potential for all kinds of investors belonging to various countries.
Forex market has really transformed in last few years as new techniques have been introduced due to technological advancements. Liquidity aggregation and algorithmic trading techniques are two most important techniques introduced to the Forex market. These techniques have improved interconnectivity among large number of market players and they has also increased the widespread sharing of risk among market participants. In addition to that they have also enabled forex traders to make quicker execution decisions at very low trading costs and they have resulted an increase in overall FX turnover.
The proliferation of the liquidity aggregation have really prevented a harm to the trading efficiency just after the demise of the inter-dealer market. This also means that proliferation of the liquidity aggregation has been one of the most effective innovations for the Forex market. Moreover, this latest form of aggregation effectively links various liquidity pools via algorithms that direct orders to a preferred venue. In addition to that it also allows market participants to choose preferred counterparties and liquidity providers to receive price quotes. This kind of change also transformed the search costs and they have significantly decreased now. In addition to that, exaggerated utilization of algorithmic techniques and order execution strategies permits the sharing of risk to take place faster . In addition to that, EBS also grew from 28% to 68% of volumes during the time period of 2007 to 2013.
The role of the main market participants has also transformed and changed due to the availability of new dealing technologies . Moreover, electronic trading within retail-oriented trading platforms have also increased the FX market access to a much larger range of end users and now it favors a more active participation of non-dealer financials.
Best managed forex account
A best managed forex account is a type of account in which professional trader/money manager manages the Forex trading on the clients’ behalf. The account consists of a personalized portfolio which is owned by a sole investor. The account manager handles the best managed forex account according to the needs of the investor. The investor is allowed to advise the account manager about creating and managing the Forex portfolio. Investor has every right to devise strategies with the help of account manager. The professional account manager helps investors to take themselves out of the equation and trade without the psychology and emotions that come with wins and losses. However there are some investors who let the account manager to manage the best managed forex account according to the requirements of the Forex market.
Best managed forex accounts can be compared to conventional investment accounts of bonds and equities. Since, investment manager handles the trading logistics just like these account managers of the best managed forex account. The account manager is also not allowed to withdraw money from the best managed forex account of the client. Since, account manager is only allowed to manage the funds on the behalf of the client. Account managers are only allowed to charge some percentage of fees for their account management services. It is important for the investors to do a detailed research on the percentage of fees charged by different brokers.
Investor must search for a best managed forex account of a some reputable brokerage company who has very good trading history. Forex investors must know how much money should be invested in the start as he has complete control on his investment funds trading account. They must first open a trading account at a reputable brokerage firm of their choice. Then allocate the necessary amount of funds for a best managed forex account. Well, upon setting up a managed account, both the investor and money manager must sign a document called a Limited Power of Attorney Agreement (LPOA). This is a very important agreement for both investor and broker as it allows the trader to trade on an investors account on their behalf. This agreement is more important for the investor as it provides a high level of control, security, and transparency to the investor. This agreement also provides full control of the account funds to the investors. Therefore, they can revoke the agreement if they are satisfied with the performance of the account managers and the brokerage company.
Conclusion
The Forex market is considered to be the biggest financial market with daily transactions of more than $5 trillion which is more than the futures and equity markets combined.
Managed Forex Accounts are one of the best investment options for the Forex traders. However, forex traders must know how to solve issues faced by them while trading in risky forex market. Following are some strategies to overcome issues faced by the Forex investors.
Forex investors must keep it simple while analyzing the changes taking place in the market. Forex investors must know how to use some simple analyzing tools such as charts to develop a formidable long term investment strategy. They should keep in that usage of too much charts can really confuse them and it will force them to develop a wrong attitude about forex .Investors just keep a simple thing in their mind that choosing an appropriate buying and selling time is the most important thing in the life of the Forex traders. The forex tools such as candle stock price chart, moving average and relative price index are very effective to predict the appropriate time for buying and selling in the market.
Forex investors must develop short term and long term strategy before investing their fund in their managing forex account. Investors must have a plan to increase their revenue before taking any big risk. The basic rule for newbie investors is to raise your risk and investments only if they have doubled their initial investment. Investors must keep your risk per trade constant until you feel that you have moved to the next level of income.
Forex investors must not rely too much on the economic and political news for buying and selling their investments. Economic news and data is useful guide for investors but relying too much on them can mislead them. This is because news forces traders to develop emotions and make rush moves that are pointless. Economic and political need can force investors to abandon their predetermined plans and may damage their long-term goals. However, investors can get some guidance from various trading seminars and trading analysis for developing their short and long term investment strategies.
Forex investors must also keep an eye on the overall risk on every trade to create a comprehensive investment strategy plan. In most cases when trading, traders tend to focus on the number of trades they are deploying and forget about the real value of the total trade in currency terms. They must be aware of the multiple failures as it helps in identifying the total risk per trade and that will also reduce the exposure to prevalent risks in the market.
Investors must also consider the risk level of a best managed forex account . They should make sure that risk level of their account and trading style of their manager must be at the level of risk you’re comfortable with. Investors must also guide their account managers about the amount of risks they must take to achieve their investment objectives.
Forex traders must be aware of the fees, expenses, and minimum deposits involved with their best managed forex account . Since these fees and charges can really increase the overall costs of their trading account. Some brokerage firms may charge performance fees to investor account. The % of their fees is totally dependent on the account type, and risk level of the best managed forex account. The rates charged by the brokerage companies vary between 10%-35% and in some cases even higher. These rates are charged according to the principle called the “High Water Mark”. This principle is applied to our account if at the end of each month our net balance is higher than a certain percentage. In addition to that, some reputable brokerage firms may also charge an account management fee on top of the other fees for following a specific formula.
Investors must check the past history of the brokerage firm before selecting it for best managed forex account. Past performance may not be an indicative factor of future results, but at least the history depicts the experience of the forex account. Reliable and registered brokers always have published history of at least last few years.