There are a very few ways to make money in the foreign exchange markets. You could trade an account yourself or you can set up a managed account. By using a managed account means that you’ll use a robot to make your decisions for you or you’ll hand your funds over to an experienced trader to manage your money for you.

Managed Accounts

In a managed forex account, you give your money to a professional investor and that he manages it for you. In return, he will take a management fee, which is usually between 10 and 20 percent of the profits. If you do not know how to trade yourself this can have its advantages as you won’t have to spend endless hours analyzing the markets. The returns on managed accounts could vary widely. Some funds will average 20 percent a year or more, many will be lucky to make 10 percent annually, while others will lose money. Most managed accounts seek participants with a minimum of $5,000 to invest. Choose a manager with at least a five-year track record.

Auto Trading

In another form of managed forex called auto trading, an experienced currency trader links his account with yours by using a piece of software and his trades are automatically placed in your account. Using this service you pay per month rather than a percentage of profits. The service is newer and thus the track records are usually only several months old.

Expert Advisers

A forex expert adviser is a set of rules that have been programmed into the MetaTrader 4 software package. It will automatically execute trades in your account 24 hours a day. The long-term track record for this type of managed account isn’t the best.

Hedge Funds

When you have sufficient funds, you are able to join a forex hedge fund. However, you’ll need to either have an income of $200,000 for the past 2 years or a net worth of $1 million to do so. This is an investment vehicle just for those people who are already fairly wealthy. Like other kinds of managed funds, the fees depend on performance and the industry standard is 20%, even though some managers will charge around 50%.

Risk

As with every investment vehicle that needs you to hand over your money to someone else, there’s a risk that they’ll either lose it or run away with it. When investing in a hedge fund or managed fund, do your due diligence. Forex is a fast-paced market then there is always a probability of loss.

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