As with most business ventures that sound too good to be true, there are many scams on the Internet advertising passive income and not delivering. It is important before investing in any passive income opportunity to do your homework and make sure the opportunity is a legitimate one.

Managed Foreign Exchange Accounts, or forex accounts, can be an excellent passive income opportunity for the right investor. Here is some information to help you decide if they are right for you:

History

The Foreign Exchange is the world's largest financial market where investors trade not stocks and bonds but currency. Over 2 trillion trades are posted on the forex market daily through interbank networks. The forex first became available as an investment tool in 1998. Prior to this only banks and other major investment firms like hedge funds had the ability to invest.

What Is A Forex Account?

A managed forex account is where a licensed trading firm makes trades for investors while collecting a percentage of the monthly profits earned. The good part about this is that if their trades do not make money, they don't collect any money. This gives them an incentive to make smart trades and begin generating passive income for investors.

Investment Requirements

Initial investment requirements range from $5,000 to $25,000 depending on the forex trading firm chosen. An investor is in complete control of their money at all times. The account is in their name and the investments and passive income generated can be monitored daily online. Typically, the trader has special permission through a limited power of attorney to make the currency trades within the account, but nothing else.

Beware Of Scams

There are plenty of forex scams on the Internet and elsewhere, so before choosing an investment firm with which to generate passive income, it is important to know the signs of a forex scam. The U.S. Commodity Futures Trading Commission states that from 2001 to 2007, approximately 26,000 people lost $460 million in forex frauds. The CFTC has issued warning signs for forex trading scams. Here are a few important ones to consider:

1. Beware of opportunities that sound too good to be true
2. Avoid any investment firm that predicts or guarantees large profits
3. Stay away from firms that promise little to no financial risk
4. Don't trade on margin unless you understand exactly what it means
5. Review a firm's performance track record before investing

A managed Forex account is a good passive income opportunity for those looking to make a sizeable investment and then truly sit back as passive income is generated through investment returns. It does typically come with a sizeable risk, so only investors who truly have disposable income should consider earning passive income in this way. For these investors, however, sizeable risk often translates to sizeable gains!