A managed forex service allows those who do not have the time, skill or motivation to trade this potentially lucrative market. The reality is that to trade this market and be consistently profitable you need the types of skills that few people have. This is why it makes sense to trust this task to trained professionals.
A trained professional is someone who has been able to consistently trade at a profit and apply the necessary skills such as disciplined money management and trading according to a well researched strategy. The process of course sounds simple but few have the focus and discipline to apply them successfully.
An administered FX service is basically where you allocate the task of trading your brokerage account to a money manager. The money manager or trader is tasked with generating a profit on your capital in exchange for a percentage of the profits in the form of a performance fee. The exact performance fee varies but is typically in the range of 20 to 50% of profits, plus there may be an annual fee in the realm of 1 to 2% of the balance.
Ultimately it is up to the individual to decide how much to invest in an FX administered fund, just be aware that trading on margin with high leverage is classified as high risk, and whilst these factors make it possible to start with a relatively modest investment and get high returns they can also work in reverse and cause significant and rapid trading losses. Be mindful of this when considering investing in forex.
Trading on margin with high leverage is classified as high risk, however, managed correctly the down side risk is manageable. Through the use of strategically placed stop losses and strict money management it is possible to have effective risk management with forex.
Of course a strict and professional level of trading discipline is required if this risk management is to be effective, which is why it is smart to invest with a managed program run by a team of professionals.
Legitimate managed currency services will almost always have you invest your funds directly with a registered broker in a regulated jurisdiction. This arrangement gives you the best protection from potential scams, and also gives you significant control over your funds.
Usually with trading accounts over a certain size, your funds never actually leave your bank until the end of the trading month when your account is credited any profits less the fees payable to the broker and the money manager.
This gives you the ultimate protection as the funds are kept with a government guaranteed bank. You will also earn interest on the unused funds. This is definitely worth looking into if you have an account of over $1m.
Often you will see claims on the internet about potential returns that might use terms such as 50% a month or more. Whilst these types of returns are possible it is highly unlikely that they are sustainable.
Personally I have not witnessed anyone achieve figures such as thing for a prolonged period of time. Much like the laws of physics where forces are equal and opposite, risk and reward are much the same. You simply can't get large returns without taking large risks. The markets invariably punish those that ignore this rule.
Any reputable managed forex provider will provide you with the brokers LPOA or Limited Power Of Attorney. This is simply an agreement that allows the money manager to trade your Managed Forex account without giving them access to withdrawal or otherwise handle funds. This gives you significant protection from any abuse and also allows you to revoke the LPOA at any time should you deem it necessary to do so.
