October 17, 2013

Choosing Money Managers On The Foreign Exchange

foreign exchange

Volatility on the foreign exchange is going to be your biggest ally and enemy at the same time. It can be an ally because without such volatility you cannot hope to succeed in the forex market. However, it can be your enemy as well because it can end up making you lose a lot of money.

This double edged nature of the foreign exchange often pushes forex traders towards using money managers in the market. When this need to stay away from accountability is combined with the claims of success of money managers, it is not surprising that they turn out to be so attractive to forex traders.

However, even money managers can end up losing you money on the foreign exchange unless you choose a good money manager. Here is how you should go about your selection process to maximise your chances of making money.

Managers Who Have Been Around For Some Time

Experience is the most important thing when choosing money managers. The longer the money managers have been around, the better it will be for you because it would mean that the managers have seen different conditions and situations on the foreign exchange. This knowledge of not only having seen different conditions in the forex market but also coming through them will ensure that they end up making you money.

Managers Who Conduct Business Transparently

At the end of the day, you will be giving your hard earned money to the money managers and leaving it to their discretion as to how to use it. There are many scams on the internet which you need to be careful of as well.

Both these things make it imperative that you choose those money managers on the foreign exchange that take pride in transparency and client satisfaction. If a money manager is transparent in its dealings in the market and with its clients, then you can be sure that you can keep a check on your money and how it is being used.

Managers That Provide Annual Returns Of 15 Percent

There is no point giving your money to a money manager who is going to make you one percent at the end of a year because this is something that even the slowest of traders can manage. You should look for those money managers who can promise you a compounded return of 15 percent over the period of one year.

Splitting Assets Between Different Managers

Relying on any one money manager, no matter how exceptional and successful, is never a good idea because anything can happen over an extended period of time. This is why it is recommended that you split your risk capital between different money managers on the foreign exchange.
Being Wary Of The Risks Involved

You should also always be aware of the risks that you are taking by giving over money to money managers. No money manager is a miracle worker and all of them will be working under the same market conditions, which means that your money will be at risk due to the volatile nature of the foreign exchange.



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