Trust management on Forex, features of use

Trading on the forex currency exchange seems simple only at first glance; in order to become a successful trader, you need to take more than one training course and gain experience in practical trading. Not all investors are up to this task; many novice traders lose quite large sums of money in the first days of work.

You can protect yourself from risk by entrusting your money to a professional trader, who is a representative of a brokerage company. This choice of investing funds is called trust management.

Forex trust management is the transfer of rights to manage your own capital to one of the brokerage company's representatives or simply to a professional trader. The former option is preferable, as in this case, the broker itself acts as a guarantor of the safety of your funds.

Practical points.

To make this type of investment, you should contact one of the brokerage companies that offers this service.

The second step is choosing a managing trader, that is, the person you'll entrust your money to. Detailed performance reports for all managers are usually published on the company's website. These statistics provide an idea of ​​the average return over the past months.

Once you've made your choice, you'll need to sign a service contract and pay the fee. Be careful, as the contract is the document that confirms your partnership with the company.

Your profit will depend on the performance of the selected trader. At the end of the month, you'll receive a portion of their profits, typically 50%. For example, if your account profit was $300, you'll only receive $150.

Advantages and disadvantages of trust management.

Advantages.

1. High returns – earning a return far exceeding the interest on a bank deposit. On average, using trust management, returns range from 10 to 20 percent per month, or 120-240 percent per annum. This is significantly higher than investments in other business sectors.

2. Passive investing – unlike forex trading on your own, you don't need to spend time researching vast amounts of financial information or constantly monitoring the news. Your only responsibility is withdrawing your profits to your own account.

Flaws.

1. High risk of loss . Even the most successful trader can make mistakes that lead to a deposit drawdown, which can result in you losing part of your funds. To minimize the risk of loss, you can insure your deposit, but this will significantly reduce the return on your investment.

2. Funds availability – it can take anywhere from a few hours to a few days to receive your funds, as they may be used to maintain an open position, and closing it immediately would result in losses. Therefore, withdrawing funds instantly, as is the case with closing a bank account, is not always possible.

One option for trust management is trading using PAMM accounts. In this case, you don't transfer funds to the manager, but rather grant them access to your account. You retain full control over it and can close all orders and withdraw your funds at any time.

A similar service can be obtained from InstaForex or Alpari the AForex broker also offers interesting investment programs .