Managed forex accounts present a viable alternative for those people who find they do not have the time or inclination to trade their own forex account, to benefit from the opportunites offered with the forex market. Unfortunately, experience has shown that they also open up investors to the down side of this type of managed investment, such as ponzi scams, trader mismanagement and unscrupulous brokers.
Sadly over the years we have witnessed a lot of managed investment scams, most recently of course, perhaps the largest scam of all is the Bernie Madoff case, where tens, perhaps hundreds of billions of investors funds were lost, in the worlds biggest  Ponzi scam.  Managed account scammers invariably ask victims to invest more money than they can really afford for this type of risky investment.

Sometimes they suggest investing borrowed funds or securing  a loan from your mortgage. Being caught up in this type of scam can lead to financial ruin, not to mention the physical and psychological damage this can cause. However, the reality is that even the best intentioned forex account manager can still empty your account balance through mismanagement and just plain bad trading.

With a managed account is most important to always have complete control over your own funds. This means investing directly with a reputable, regulated broker and offering only limited power attorney to the account manager, to allow them to trade the account. A pooled account whereby the funds are handled directly by the manager do not offer the investor this type of protection.

Whilst legitmate pooled Hedge Funds who trade forex do exist, these usually have very high initial capital requirements ($1 million), as well as a

requirement for the person in question to be a so called “sophisticated investor” , “high net worth individual” or “person of means”  which invariable means they have a net worth in the millions of dollars and the capacity to easily absorb any losses from trading the managed forex account as the investment represents a tiny portion of their overall net worth. 

They key point is that any individual offering a high guaranteed fixed monthly return trading forex is probably involved in some type of  Ponzi scheme, named after the very infamous Charles Ponzi. It typically works like this:

The fund manager offers unusually high monthly returns and some type of guarantee . The exact figures are not so important just the mode of operation.

Returns of anywhere from a few percent per month to 20 or even 30% per month are offered. Normally  none of the funds are ever invested in the forex market. The fund manager simply uses the funds from new investors to pay the high returns to existing investors. Typically these types of schemes can last a few months, but as in the case of Bernie Madoff which by all accounts appears to have been a very sophisticated scam, they can last for many years, under the very noses of regulatory authorities.