Forex news. Many investors who invest money in futures, warrants, stocks and bid currency pairs at forex mostly lose their deposits. Only having lost their own money they start to understand that investing and independent trade at stock exchange are two things, and that trader is a profession that demands specialized knowledge and experience. Therefore, for such people who want to gain profit from using their personal savings the best option is to find a successful professional traders. Even if such tandem is rendered, people who choose to increase their capital via stock exchange bids not only have to decide on the amount of trust management, which varies from 20 to 45 percent from the profit, but also to be aware of some stumbling blocks of such transactions.
According to our expert, the head of Canadian Trade and Investment Community of Masterforex-V Academy Yevgeniy Olkhovsky, such difficulties are many enough to be compulsory known of.
In a number of articles about trust management we will try to clarify the following questions: “What difficulties can investors encounter if they use trade management at Forex market?” and “How shall investors solve the problems that arise when management over the deposit is transferred to a professional trader?”
The difficulties of work performance principles at financial markets often bring traders-beginners into a stupor; the main of them are the following:
- difficulty to hold fundamental technical analysis;
- diversity of information and inconsistence of index signals;
- wide choice of brokers without their objective evaluation;
- variety of trading styles and means.
One can easily come at a loss here! This certainly misleads those who do not have corresponding education or enough time to be aware of the latest news, overviews, and opinions of financial market experts.
At the same time, vast majority of beginners remain intrigued by rumors about successful traders who made millions and managed to “invest” in the right time. It is most likely that trust management can become their excellent chance!
Trust management over an account allows a professional trader (or the person who claims to be such) to bid money of a private investor, or on his behalf, for the reward by means of a fixed share from the gained profit.
According to a contract, investor enables a trader to perform transactions by using a specially designated trade account, except such transactions as transfer of balance or its part to another account, which fully eliminates the risk of a money steal from investor.
A private investor, who provides a management account, receives a number of benefits:
• experience of a professional trader. This is the only element, which reduces enormous trade risks and which is obtained by practicing traders, who received it as a result of long-term practice. A beginner does not have such experience, and cooperation with a professional can solve this problem;
• emotional constituent of bids. Not every trader can stand emotional pressure, which accompanies any bid results. We are all individuals and react to one and the same inflows or losses in different ways, as a result, not everyone maintains the ability to keep working;
• time frame. Lack of time can be another barrier. Unlike investors, executives, who are involved in bidding the whole working day, can direct all their energy to work for their clients.
There exist two types of management work: manual trade and so-called automatic trade, when a specially designed trade system and a number of money-management rules can provide more or less steady profit.
However, many investors prefer to manage their account in an old-fashioned manner – “manually” even at present, because they are often able to gain more profit at a relatively small account drawdown.
The abovementioned advantages of trust management sound very attractive, but at the same time there is a number of threats that are worth mentioning:
- by trusting his account to a manager, investor receives no personal experience as a trader, he simply looses an opportunity to gain personal practice;
- by transferring bidding responsibility to another person, the owner of the entrusted account commits himself to a certain person, who has his own values and drawbacks (which are also present);
- lack of practice can lead to the condition when this investor will no longer be able to individually asses market and will never trust his own judgments;
- past achievements of a certain manager can prove useful for defining his abilities at the present time, however this can mislead concerning his bids afterwards. Past, sometimes even unique results do not yet guarantee similar success in future!
However, in general, trust management can be an excellent way to increase assets without the necessity of every-day control and emotional tension. Provided that you choose the right professional trader, trust management can become your excellent investment.
Community of Canadian Masterforex-V Academy – canada@masterforex-v.org
