- Eugene Steiner
- Updated:April 21, 2025
If you scroll any forex trading related community, you’ll spot two kinds of posts, among other things. The first are self‑proclaimed forex money managers flashing “proof” of success as screenshots. The second are traders begging for a “reliable” manager or signal service. You’ll notice that the screenshots are usually a handful of winning trades, just enough to impress. Before you let slick marketing pull you in, learn how to test whether this account management forex service is truly trustworthy.
How Do You Conduct Due Diligence?
It doesn’t matter if you are looking for a “reliable” signals provider or someone who can trade for you. In our industry, people who manage other people’s money for a fee are called forex money managers, forex fund managers, or forex portfolio managers. If you let someone manage your money for you, you will risk your hard-earned money and rely on someone else’s skills and experience. The least you can do in this situation is to ensure they really have these skills and experience. The “checking” process is commonly called “due diligence.” A good practice to start your due diligence process is asking your potential money manager as many questions as possible. But what to ask if you don’t have much experience yourself and don’t understand the process? Fear not. We are here to help you. So, where do you start your due diligence? Start by asking the following questions.
Are You A Licensed Money Manager?
Why is asking this question important? Well, for one thing, forex portfolio managers are legally required to be licensed in reputable jurisdictions like the UK, the US, and Europe. Additionally, they must have a strong educational and professional background. Understandably, these requirements may differ worldwide, which may be absent in your particular area. However, if someone wants to manage your money and you are considering their managed account services, asking this question won’t hurt. Be wary if their educational background is YouTube or TikTok university and trading is limited to a demo account 🙂
International Licensing Registers for Financial Professionals
| Tool | Purpose | URL |
|---|---|---|
| FCA Register (UK) | Check if a UK firm or individual is authorized to provide financial services | fca.org.uk |
| BaFin Register (Germany) | Verify licensed fee-based investment advisers in Germany | bafin.de |
| CSA National Search (Canada) | Search for registered investment firms and individuals in Canada | securities-administrators.ca |
| ASIC Register (Australia) | Search Australian investment firms, licensees, and authorized reps | asic.gov.au |
| FINRA BrokerCheck (USA) | Look up registered brokers and firms in the U.S. | finra.org |
| SEC Investor.gov Check (USA) | Verify U.S. investment professionals and advisors registered with the SEC | investor.gov |
| NFA BASIC (USA Futures/Forex) | Check registration status and disciplinary history of U.S. forex and futures firms | nfa.futures.org |
Naturally, this isn’t an exhaustive list. Its purpose is to give you an idea of what these tools look like. Many countries have similar tools, which you can find online.
What Is Your Professional Background?
If you open any trading‑related sub on Reddit or Facebook, you’ll notice that everyone claims to have an edge, to be profitable and to have their emotions perfectly under control. The combination of factors that retail traders mistakenly believe determines success. In other words, people love to brag. Some even post screenshots of five or ten winning trades to “prove” their skill and win your trust. Very often these posters go a step further, advertising account management forex services that promise hands‑free profits. And, surprisingly, many traders fall for it. How do we know? Because the same subs are full of complaints from people who handed over their money to a so‑called manager who was supposed to grow the account … and didn’t. A verifiable professional background (licenses, years in the industry, audited results) tells you three things:
- Competence: They’ve spent time mastering market mechanics rather than just flashing a lucky streak.
- Accountability: Regulated professionals answer to authorities and clients; random Reddit, Telegram, WhatsApp traders do not.
- Risk control: Seasoned managers have survived drawdowns and learned to protect capital—skills you’re literally paying for.
If a prospective manager can’t supply concrete credentials or hesitates when you probe, treat it as a red flag and move on.
Why Should I Invest with You and Not with Someone Else?
As a diligent investor, you need to pinpoint why this manager, and not the next person advertising managed forex account service, deserves your capital. Even if you don’t grasp every nuance of their trading strategy, asking this question forces them to spell out what truly sets them apart. Their answer lets you compare their strengths, risk controls, and performance metrics with alternative managers. It also reveals whether they have a coherent edge or just slick marketing. Ultimately, this credibility stress‑test helps you decide if they can safeguard your money and deliver on their promises—or if you should keep looking.
If a manager can clearly explain the edge behind their account management forex offer—strategy, risk control, fees—you know they stand out for real reasons; buzzwords mean marketing fluff. Their answer shows transparency, reveals how they protect capital, and lets you confirm their goals match yours. A manager who can’t state “why me?” probably can’t deliver when markets turn.
What Makes Your Strategy Unique?
Asking a forex money manager to outline their strategy is standard due diligence. You’re not prying for secret sauce! You’re confirming that their approach fits your objectives and risk tolerance. If they can’t give a simple, confident overview—covering trade selection, position sizing, and risk limits—look elsewhere. It tells you whether the manager actually has an edge—or just copies generic setups. A clear, jargon‑free reply shows they understand their own method, can explain its risk controls, and can link it to your goals. Vague or evasive answers are red flags. Another red flag, if their strategy is based on unscientific principles that don’t have any academic backing. No peer reviewed research papers on the topic, no citations in professional literature or no coverage by recognized financial outlets counts as unscientific.
How Do You Manage Risk?
When discussing risk management with your money manager, ensure they clearly explain their approach. Avoid money managers who downplay risk or promise unrealistic returns without addressing risk mitigation. Again, you don’t need a minute description of their risk management methods. A general description would be sufficient to put you at ease. A competent money manager will utilize sound risk management techniques, including stop-loss orders and responsible leverage management.
How Are My Funds Protected?
Ask whether client funds are segregated at a regulated broker and covered by an investor‑compensation scheme (e.g., FSCS in the UK, SIPC in the U.S.). Note that these schemes protect you only if the broker fails, not against trading losses. Also request a copy of the manager’s business‑continuity and disaster‑recovery policies. These are standard things for professional asset managers in the forex space.
A segregated account is a dedicated bank account where a broker or money manager must hold client funds separate from the firm’s own operating capital. Regulators such as the UK FCA and many others make this separation mandatory. If the firm goes bankrupt, client money sits outside the pool of assets available to general creditors. – Source: FCA Handbook
Moreover, legitimate managers use regulated brokers that offer segregated accounts; scammers often ask you to wire money straight to their personal or omnibus accounts. Segregation creates clear bank records, making it easier to verify balances and pursue recovery in court if needed. If something goes wrong, you can appeal to the regulator that enforces client‑money rules (e.g., FCA CASS in the UK). We must point out, however, that it doesn’t protect from trading/management losses.
Do I Deposit Directly to Your Account or Become Part of Your PAMM, MAM Account?
The answer to this question clarifies the structure of your investment. A PAMM (Percent Allocation Management Module) or MAM (Multi-Account Manager) structure involves the money manager pooling and managing multiple investors’ funds. In this arrangement, they don’t have direct access to your funds, because you deposit with a regulated broker. In contrast, depositing directly to the manager’s account implies a different arrangement. Exercise extreme caution if an unregistered, unlicensed money manager is asking you to transfer money directly to them or to some obscure brokerage or exchange. Be especially cautious if they insist on you making a transfer in cryptocurrency.
Why Does It Matter?
In case of PAMM/MAM structures, you open an account with a regulated broker; the manager gets trade‑only access. Your money stays in your name, protected by client‑fund rules, while performance is pooled and allocated proportionally.
If you make a direct transfer to the manager (or an obscure broker/exchange), you surrender custody. If the manager is unlicensed—or asks for crypto—there’s almost no recourse if they disappear or trade recklessly.
Do I Deposit via Bank Transfer or Crypto?
When funding an account‑management forex deal, nail down the payment channel—bank wire, a regulated e‑wallet such as PayPal, Skrill, or a licensed regional alternative, or cryptocurrency.
Bank transfer moves through fully supervised institutions, logs the manager’s name and account number, and leaves a paper trail authorities can follow if fraud occurs. Reputable e‑wallets add buyer‑protection tools (dispute resolution, chargebacks) while still providing a regulated audit trail, which is safer than crypto, though not as iron‑clad as a direct bank wire.
Cryptocurrency transfers are fast and private, but irreversible; once it leaves your wallet, you have virtually no legal recourse. Stick with bank wires or well‑known, regulated wallets. Treat any manager who insists on crypto‑only or obscure payment methods as a major red flag.
IMPORTANT! We strongly advise you NOT to transfer funds to unlicensed, unincorporated managers. If you deposit money with a natural person (private individual), you cannot recover your funds later.
What Is the Minimum Investment Period?
Ask how long your capital must stay invested, because that window is usually tied to the manager’s trading style and risk controls. A longer lock‑up can boost returns by preventing hasty redemptions—but it also limits your flexibility if you need cash sooner. Clarifying the minimum period (and any notice requirements for withdrawals) lets you judge whether the commitment fits your liquidity needs and overall financial goals.
What Is Your Weekly, Monthly, and Yearly Return Target?
Ask the manager to state specific performance goals for each time frame. Clear targets let you benchmark results, and repeated shortfalls flag trouble. It’s essential for money managers to be transparent about their return targets. This question encourages open communication and sets clear expectations between you and the manager. By knowing the targets, you can later evaluate the manager’s performance. It could be a red flag if their actual returns consistently fall short of their targets.
Speaking of unrealistic returns: A shout out to all those who think that turning USD 100 into USD 100k overnight is a realistic return target. No, it is not.
What Realistic Returns from a Managed Forex Account Actually May Look Like?
| Benchmark | 2023 Return | Notes |
|---|---|---|
| Barclay Currency Traders Index | +6.45 % | Tracks 100+ professional FX CTAs; 2022 was +8.98 % |
| Global hedge‑fund average (all strategies) |
≈ 8 % | Low‑teens years like 2023 are considered strong; long‑run median is high single digits |
Legitimate FX money managers who control risk typically “aim for” they never “guarantee” any return. When they target something, their targets are along these lines:
- 0.5 – 1% a week,
- 2 – 3% a month, and
- 8% a year after fees.
Anything pitching 100× in a few months is pure fantasy.
What Is Your Track Record?
Before funding any account management forex or signal service, ask for an audited track record—or at least one that’s independently verified on a platform like Myfxbook. You need more than headline returns: look for multi‑year data that includes drawdowns, volatility, and a Sharpe ratio across different market conditions. Consistency, not a single lucky month, is what proves skill.
Why Does It Matter?
Statistical confidence. A long account history gives you a larger sample size, shrinking the margin of error. With more data points, averages reflect reality instead of a lucky streak, and risk metrics such as drawdown or volatility are much harder to game.
Red‑flag filter. Managers who dodge the request—or flash a few shiny screenshots while promising “eye‑popping” gains—should be avoided.
Quick example: Five winning days of +USD 20 look great—average USD 20. Add one USD 30 loss to this streak the next week and the average drops to USD 11.60. One hit can cut a glossy screenshot in half. That’s why we need as much trading history as we can get our hands on.
Bottom line: Demand several months—ideally years—of verified results. If the manager can’t (or won’t) provide them, move on.
How Does Your Fee Structure Work?
Understanding the fee schedule is vital for judging whether a managed forex account service is worth its cost. Most managers still follow the classic “2 & 20” model—an annual 2% charge on assets under management plus 20% of any net profits. Reputable firms pair that profit share with a high‑water‑mark rule. In practice, it means that performance fees are charged only on gains that push your account above its prior peak. If the balance falls below that level, no performance fee accrues until new highs are reached. Fee structures do vary; some managers lower the fixed percentage, use flat monthly subscriptions, or apply tiered profit splits. Always insist on seeing the exact fee schedule, in writing, before investing. Clarifying every component up front lets you compare managers on a true net‑return basis and sidestep unpleasant surprises.
Conclusion
Evaluating the performance of your forex money manager is crucial to safeguard your investment. Consider factors such as track record, risk management, performance metrics, investment strategy, communication, client feedback, and regulatory compliance. By conducting thorough due diligence and assessing these factors, you can make an informed decision. Ultimately, you can select a reliable forex money manager who aligns with your investment goals and risk tolerance. Remember, it is your hard-earned money at stake, and choosing the right money manager is essential for long-term success in forex trading.
RESOURCES USED IN THIS ARTICLE:
Disclaimer: This article is for educational purposes only and does not constitute financial or investment advice. Trading forex, cryptocurrencies, and other financial instruments involves a high level of risk and may not be suitable for all investors. Always conduct your own due diligence and consult with a licensed financial advisor before making any investment decisions.
