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.
Forex Stop Losses, Why use em?
Why the heck should I use Forex Stop Losses?
I’ve been asked several times from my forex coaching students, “Why should I use a stop loss? The market seems to see it and move to stop me out, then turn around. Why can’t I just watch the trade and get out when I feel like it?” I’ve heard (and spread) conspiracy theories about dealing desk brokers pushing the market up and down to hit our stops. I’m not a broker, but I know that some brokers make more money when we lose a trade than when we win. So the motivation is there. But that’s not the subject of this article..
I want to try and answer the question about why you should use forex stop losses every time.
The biggest reason is this: Pretend you are watching a trade with 10 mini lots and your get out point (not a stop loss, but same level) is 15 pips below the current price. You are just going for 20 pips and have your finger on the mouse. You used the restroom before you got into the trade so you should be good for hours. Then you notice that your charts haven’t moved in a few minutes, and you check your internet connection and find that it is down, you quickly call Concast (names were changed to protect the innocent) and they inform you that the lines are down and they should have it up in a day or two. You start freaking out, because you need the internet to find the phone number of your forex broker to tell them to close your trade.
In the meantime, Bob Greenspan goes on CNN and makes a critical statement about the global market. (even though he is retired) By the time you finally call your best friend in a different state, give him your account number and password for your trading platform, the market has moved 215 pips against you. What you were originally planning to be a 2% risk trade turned out to be a 30% loss to your account.
You get the idea. Solution: Place a stop loss! or if you still refuse, put your brokers number in speed dial on your phone and know what you need to say to make things happen smooth. Have your account number written down somewhere, they will want to know it too. Talk to your broker ahead of time about this process.
I was going to talk about a couple other reasons that you should use a stop loss every time and some options you have to fight the system if needed, but this post is already too long, so you will just have to check back later when I post the rest.
Good luck in your trading and have a great day.
Forex Coaching – An Insider’s View – Part Three
In Parts One and Two of Forex Coaching, I discussed reasons why some people erroneously believe they don’t need Forex coaching and the types of coaches. Then talked about what to expect from a Forex coach and some thoughts on the benefits and costs. Now, let’s assume that you realize you would probably benefit from coaching – here are a few helpful thoughts about finding a coach.
Is Bigger Really Better? One thing you should consider is whether you want to work with a big coaching firm or a small focused operation. There are pros and cons to each. With a large firm, you have typically have more stability, more flexibility for you schedule, a more active hotline process and more professionally written materials.
On the downside, a larger firm is usually more interested in their sales force than their coaching staff. I worked for a firm for 1 year that had 34 coaches. The sales floor staff made a lot more than the coaching staff. Another problem is that as the customer you don’t get to pick who you work with, and they might be just as new to Forex as you. Believe me, in the firm I worked we trained coaches for 1 week, then gave them clients, even if they had never traded Forex before. Of the 34 coaches where I worked there were 2-3 that really made a difference to their students. Here is how I look at it, large firms are really just sales companies that are using the Forex market to to create a high profit margin product to sell.
On the other hand, if you decide to look at a small one or two man training/coaching operation, then you are for the most part really getting the opposite of the large coaching firms . Would you rather be nurtured by the owner of the company or pushed through the system by one of it’s hourly employees. You can usually tell when you go into a store who the owner is, he or she is usually much more helpful and sincere to the clients. They really care, because they have a passion for what they are doing. How would you like to be taken under the wing of a professional trader, someone with years of both trading and coaching experience? Someone that is more interested in your success that your credit card.
As a Forex coach, I am looking primarily for people who I can add to our Forex mastermind community. People that will both benefit and contribute to the community so that we can all become better traders. I have found that I trade better when I’m working with other people, it keeps me sharp. I also get many great ideas from my current and past students. Not to mention some really good trades. A one-man-show will not have the extensive manual you will get from a large firm, they will probably not answer your questions all hours of the day, but you sure won’t be shoved into a Forex trader cookie cutter template. You will most likely get what you really need.
Tying it up, I’m sure you are at least a little more informed when you are considering adding a valuable team member to your journey to success in Forex.