Jared Passey’s Forex Blog

Forex Coaching Adventures

A Look at Managed Forex Funds

Managed Forex Funds, What are they, What to look for, and most importantly, what to watch out for.

If you are considering placing your money with a managed forex fund, you should know a few things that will help keep your money safe.

The average investor does not have the time or interest to learn and master the forex market on his own. It takes a special breed to take on that learning curve. I am that of that breed, it’s in my blood and as a forex coach, I love to help others find their way trading as well . However, this article is not about trading for yourself. There are a few types of people that place their money with a managed forex fund:

• Students of forex that want to get some results while they learn to trade for themselves.
• People that just have money to invest , but don’t want to learn on their own.
• Traders of the forex market that want to diversify their portfolio, by having someone else trade a portion of their account.

There are many places to find people willing to trade your money, but you have to be really careful and make sure you do your “due diligence”  before any agreements.  Unfortunately there are a few scam artists out there who are taking advantage of forex investors. There are also some good honest traders that want to make more money by trading other peoples account, however they are not skilled enough to see consistent results. Searching on the internet is the first place to start.

What to look for:

• The Deal; There are different ways the trader gets paid, I recommend finding someone that does a profit split above a high water mark. Meaning they only make money if they continue to do well with you account.  Something like a 70/30 split of the profit is normal. (70% for the investor)
• Track Record; Ask to see some results, some history, look for authenticity – anyone can create a spreadsheet with numbers on it.  Also ask for the maximum drawdown for the last few years.
• Location; Make sure you know where they are from, and you know how to reach and find them if you need to, do a little background search, If they have been involved in past scams it shouldn’t be too hard to find online.
• Longevity; I wouldn’t look at anyone that has been trading for less than 2 or 3 years minimum.
• Satisfied Customers; Nothing speaks confidence more than talking to a few of their current clients that have been with them for a while.  If they keep losing customers, then what does that tell you?
• Account Size; If they are only trading a 12K account and want you to join in at 100k minimum, then keep looking. The more money they are trading the more successful they are usually.

What to avoid:

• Guaranteed Returns; It sounds good, but there have been many scams where the investor is guaranteed something like a 7% return each month, only to find out it is some kind of Ponzi scheme.  The market fluctuates and so do trading results. Besides, what if they do 35% in a month and you only get 7?
• The Cousin; So your cousin, or whomever has been trading for a bit and wants to know if you want him to trade some money for you.  I’ll just say, “make sure it’s truly Risk Capital, and it won’t hurt your relationship if he looses it all”.
• The Robots; People who agree to trade your money with some trade robot, or automated system, this is just my opinion, but I have never seen one of these work consistently.

I hope some of these things will help you in your search for a more secure investment. Know that Forex investing is risky and that you should always use Risk Capital only.

If you are looking, contact me, I know a company with a 5 year consistently positive track record that I can hook you up with.

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