Many forex newbies believe it takes a long time to develop trading skills and become profitable traders. They wonder if there’s a way to make profits in the forex market without getting involved in the process. So, can someone trade forex for you?
Someone can trade forex for you. If it’s a friend, make sure they’re skilled enough and completely honest. You could also get a professional account manager to trade on your behalf. These agencies get a cut of your profits. Make sure they’re certified and have a good track record.
Read on to learn about the conditions of using an account manager service, how it works, its pros, and cons. We’ll also talk about the ins and outs of asking a friend to trade for you.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
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Asking a Friend To Trade Forex for You
You could ask a friend to trade forex on your behalf. But consider all the risks that come with it.
First of all, you need to trust that person fully because you’re giving them your money. Besides, you yield your account credentials to that person, so they take control of your account. But since it’s a friendly relationship, you may ignore all the legal safeguards that protect your account and money, putting you at great risks.
Second, you have to be 100% sure of that person’s trading skills. No matter how long they’ve been trading, they could end up wiping out your money. Plus, since you don’t have any forex trading experience, you can’t control what the other person is doing. So, you need to ensure their trading strategies are in line with your capital and financial goals.
Alternatively, some people give money to an acquaintance to trade forex in their forex accounts. That’s also the same in terms of risks and trust issues.
You can also ask someone else from a company or broker to trade on your behalf. Many professional traders offer services that help you make money on forex if you don’t have the expertise or time to trade. These accounts are forex-managed accounts like mutual funds in the stock market.
What Are Forex Managed Accounts?
A managed forex account allows you to participate in forex without you getting involved in the trading process. All you need is to open the account and deposit funds. The account manager will take care of the rest.
Although the manager is in charge of all the trades and makes all trading decisions, you can control the account. For example, depositing and withdrawing funds are under your control, and the account manager doesn’t have access to funds.
Depending on your expertise level, you can ask the manager to trade based on your strategies or give them complete authority to make trading decisions independently. Whatever you choose, you need to understand forex to decide on the right manager.
You ensure transparency by signing a power of attorney contract, giving the manager full control over your account. You can keep track of all trading activities on your account, check the balance, and withdraw or deposit money whenever you want.
A managed forex account is different from a regular one in terms of requirements. You need to deposit a higher base capital and pay more fees. Also, not every forex broker accepts managed accounts. So, you should consider this limitation when looking for a broker.
How Can a Managed Forex Account Help You?
An account manager can help both novice and experienced traders. If you’re a novice, you can avoid the common beginner mistakes by relying on an experienced person. However, you should always remember that forex trading is not 100% guaranteed, and even the most professional traders can lose money.
Also, when you have someone else trade for you, you’ll make profits without spending time on your account. So, you can keep your full-time job or even engage in other business types. Plus, you don’t need to take the pressure of market volatility and risks. Of course, you’ll be upset or disappointed if you lose money, but that’s different from the stress that comes with every trading. That’s why even experienced forex traders work with account managers.
Having a managed account is particularly helpful for those who can’t develop a trader’s character. For example, if you can’t learn from mistakes or can’t make decisions at times of uncertainty, an account manager is a good option for you. The agencies that provide account management services offer advanced trading software with risk management capabilities. Plus, you’ll rest assured that an expert runs your account.
Risks of Hiring an Account Manager
No matter how professional the account manager is, they can’t dedicate the time and attention to your account that you would. You’re the account owner and want it to grow. But an account manager has a neutral view of the account and doesn’t care about it.
Another downside is that you can never learn how to be a forex trader yourself. The account manager does everything on your behalf, and you don’t get to know how everything works. Finding a reliable manager with a good track record isn’t easy because your hard-earned money is at stake. You need to spend enough time researching the best options before choosing one.
Besides, it requires more paperwork than a regular trading account. For example, you should sign a limited power of attorney agreement to authorize the fund manager to control your forex account. It can also lower your profit potential because you have to pay commissions to the manager in addition to regular costs of forex trading. Account managers take 20% to 50% of your profits, which can be costly if you have a low capital investment.
How To Choose a Good Account Manager?
That’s probably the most challenging part of using an account manager. If you’re so busy that you can’t find a trusted manager with due diligence, it’s better to stay away from this option.
Many professional forex traders claim to be profitable and promise to earn you millions. But they’re just false advertising. So, be meticulous in researching the company’s past performance and the individual account manager’s track record. Check their overall profitability and drawdown levels in a sufficiently long period.
The Calmar Ratio is one of the most critical performance metrics that allows you to compare different managers. It compares their trading fund’s average yearly compound return rate to the maximum drawdown level typically over three years. Higher Calmar Ratio values indicate the manager’s better risk-adjusted returns.
Another thing you should consider is the manager’s risk profile and make sure it matches your goals. That’s why you need to have a basic knowledge of market dynamics. And finally, check the company’s reputation in terms of customer service and communication. Talk to their present or former clients and ask them to tell you everything you should know about dealing with them.
But always remember that good past performance can’t guarantee good future results. Market conditions change all the time, and even the most successful traders may experience painful losses. Eventually, it’s up to you to decide which option is better for you: handing over your account’s control to a stranger or spending time to improve your skills and work on your trading account.
Author’s Recommendations: Top Trading and Investment Resources To Consider
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Conclusion
Generally speaking, you could ask someone else to trade forex for you. However, depending on your living area, that trader might need specific certifications. Regardless, you should make sure they have the necessary skills and are reliable.
You could also ask professional services called account managers to trade on your behalf. They set up a managed account for you with selected brokers and take control of your account. While they could remove the burden of trading and make more profits, their commissions can be high and stop you from learning forex skills.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
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