A managed forex account is where traders or managers manage an investor’s account. The manager or trader manages the account on the investor’s behalf. An investor may advise the manager for strategies and even ask them to handle trades. Hiring a manager to do the deal on the investor’s account makes it easier because it creates an opportunity for amateur investors to start trading without much risk. Not only beginners but experienced investors also gain benefits out of best forex managed accounts. Managing and executing operations of forex trades is tricky as you have to keep an eye on the market all the time. Sometimes, you might get busy with life and have no time to pay attention to the forex market. A manager thus will work on the strategies on your behalf to make everything simple. Hiring a more successful forex professional means more chance of profiting the market.
Forex managed accounts are similar to conventional investment accounts. Your manager can add or withdraw funds into the account based on your allowance. That means they can only access your fund’s money when you give them access to do so. This is why forex managed accounts are deemed safe and secured. Managers will charge a fee for their services to your accounts. The prices may vary depending on the brokerage you use.
Types of Account
Using a managed account for forex trading has its fair share of pros and cons. There are five types of managed forex accounts available. They are Individual, Pooled, MAM, LAMM, and PAMM accounts. Let’s take a look at these accounts:
This account is the standard type of managed accounts. It is operated as a separate account where the manager trades on your behalf. They can’t transact or make any trading-related decisions without your instruction or allowance. They will provide strategy and guidance based on your account’s risk level. The minimum deposit is from $10,000 or above. There is no additional fee for this account, which is an exemplary aspect of this account. Since they are charging a large sum of money as minimum deposits, you will get a manager solely at your service.
A pooled account is similar to mutual funds. With pooled accounts, a group of investors combine their funds in a segregated account and share the profits after paying the expenses. There are plenty of options for pools, and each offers different risk levels, investment strategies, minimum deposits, fees, and costs. A pool account manager is not limited to listening to only one investor’s request, like an investor’s account but the entire pool. For choosing an account, each fund will review the years of past performance. You can enter a pooled account by paying as low as $2000. However, keep in mind that there is often minimum participation required for each pool.
Lot Allocation Management Module, also known as LAMM, is simple and allows the investor to choose a standard lot for trading purposes. The manager will do the trading. LAMM also lets an investor select the percentage of profit and loss of the amount invested. The manager who will handle the trades will trade using his own funds. As an investor, you can choose the number of funds per transaction, monitor them, and instruct your manager to trade or plan and execute strategies. You can work with as many managers as you wish to benefit from the diversification of portfolios.
Multi-Account Manager (MAM) enables the manager to run various trading accounts via a single terminal. Individual accounts are pooled into an available funding system using the account. An investor is responsible for making decisions about the accounts and the fund, depending on the investment. Individually traded accounts can modify or function MAM trades according to the investor’s wish. The master trader will pay for the performance fee depending on his trades’ performance and the return’s percentage. Although MAM is an investor-friendly account, the risk level is higher than other types of accounts and needs the experience to take risks.
Percentage Allocation Management Module or PAMM accounts are outstanding for investors as it has a variety of benefits to it. Investors can copy trades from the master account via PAMM and can trade themselves. With a PAMM account, an investor has flexibility and options to choose between styles and strategies, making PAMM a suitable account for investors. It allows you to diversify the trading using multiple strategies to gain the upper hand in trades. A single strategy can give you diverse outcomes, and that’s a useful aspect of PAMM accounts.
When looking for a managed forex account, you should look at the account’s risk level and the manager at first. Then check out the fees, expenses, and minimum deposits to minimize your chance of losses as much as possible. Also, always opt for a well-reputed broker and don’t put money on ones that you feel shady (new, lesser reviewed brokers) as this might turn out to be the worst decision.