I wanted to briefly discuss what I like to call “Equity Friendly” forex managed accounts. If such a description actually exists, I had to assume it had it’s polar opposite, “Non-Equity Friendly” accounts.
My definition of an “Equity Friendly” managed account is a program offering an overall trading model that protects the integrity of it’s clients’ principle as top priority while patiently waiting for high probability trade opportunities. This is the methodology used by superior hedge funds and is usually reserved for high-end investors, frequently to augment their portfolio’s for retirement. Investors with the means to meet the high minimum deposit requirements therefore have a long-term view toward their accounts and have realistic expectations on their returns (5%-10% per month with low monthly draw-down).
All trading is performed live by highly trained professionals with many years of experience and mostly without the use of automated robots. Their trading model is usually based on the momentum of the long term market trend for greater stability and they always use prudent money management!
It’s not unusual to have periods on seeming inactivity in the trading of these accounts. Many inexperienced investors see this as a negative, buying into the theory that, “you can’t make serious money unless you trade constantly” or “you gotta be in it to win it”. Unfortunately, this is the mentality of those who play the lottery! Experienced investors know that this couldn’t be further from the truth.
Adversely, “Non-Equity Friendly” accounts primarily trade on the shorter time frames as their base, risk way too high a percentage of their client accounts per trade and usually use automated robots that trade blind through all market conditions. These are the programs that are in vogue and plaster the web these days. Clients are lured in by totally unreal profit expectations. Their traders usually end up over trading and over leveraging client accounts trying to qualify for their performance fee, all the while running up their per trade fee’s.
The undue risk of this type of approach inevitably experiences significant losses in their clients’ accounts (30%-40% or higher) which is essentially unrecoverable. The trader feels anxiety to approach their unreal advertised monthly returns and continues to trade away through the most volatile market conditions, using higher and higher leverage trying to recover, only to dig a deeper hole for themselves and you.
Please ask yourself this one question, What have you heard about peoples’ actual experiences investing in the Forex market over the years, turning a $ 10,000 account into $ 30,000 or turning a $ 10,000 account into $ 1,500 in 6 months? It’s your money! This also applies to most of the signal services out there, offering live execution or not. The trick is to find a firm that uses this equity friendly approach, but doesn’t have the $ 50,000to $ 100,000 and up minimum deposit requirement.
Hope this helps.