September 26, 2021

Top Forex Brokers

Managed Accounts with Forex Brokers ReviewedForex Trading is a risky business. It demands time, experience, patience and desire for success. Many forex traders find it difficult to follow the market movements and fail to act wisely and quickly when opportunity strikes. That is when managed accounts come in. 

What are Managed Accounts in Forex?

Managed Accounts are a solution for forex traders who seek a third-party help, either an automated account or a professional trader. After all, not everyone has time to learn all those charts, technical analysis, variety of indicators, news interpretation and other complicated, but necessary attributes in forex trading. So after feeling depressed about losses and the lack of understanding of forex market, forex trader might consider managed account which will, presumably, change you from the loser to the full-time winner.

There is a problem with this idea, though. In my opinion, there is no magic wand when it comes to forex trading. It is a major misconception that managed forex account will turn your misfortune to gold. And while you consider opening a managed account, you should keep in mind that there is a lot of scam online and most managed accounts are fraud. Manage accounts can be a trap, so I strongly suggest using only trusted forex brokers.

When Managed Forex Accounts Are Required

If a trader is busy and has less time to concentrate on Forex trading, a professional is able to trade on his or her behalf.

Managed accounts are good for inexperienced traders who would prefer a professional to navigate the uncertainties of the Forex markets due to high volatility.

Trading in Forex requires a healthy psychological personality and many traders lack it.

In such circumstances taking the help of a Forex professional becomes a necessity.

Who is in charge or your account when it comes to forex managed accounts? You have two options:

1.       Automated account managed by software

2.       Account supervised by another forex trader, hopefully, more experienced than yourself!

Automated account is managed by software that is simulating trading skills. It is designed to automatically make a decision based on strategies and expertise imbedded in its “memory” by experienced forex traders. It is, in a way, a form of artificial intelligence. It sounds so simple and easy, yet there is small catch. This trading program is based on the decisions made in the past. At some point the past may fail you. After all, forex trading demands a certain level of instincts, which the program lacks. When it comes to automated account the lack of “human touch” may become a minus.

The second option is a supervised account by an experienced and, hopefully, professional forex trader. Usually it is someone with years of experience in forex trading (or so they claim). Your only job is to fund the account and the rest is done for you. Let’s just hope it is profits instead of loss! Keep in mind that even a super-genius in forex trading can make mistakes. Besides, would you be managing someone else account if you are a top-notch forex broker? Not unless you paid well. That can only mean that a personal touch in managed account costs plenty and the quality you get is no necessarily the best.

Presuming that you didn’t step into a scam and you found professional forex broker, it still doesn’t mean that they will turn you into a millionaire over night. You fund the account and you pay for the managed services. You also expect positive results. That means your supervisor will be extremely cautious and conservative when it comes to trading your money. In the best case scenario the profits will be slow.

Last, but not least, forex managed accounts is a form of a prison. You put yourself in hands of the others. You invest money in others in hopes that they are professionals to earn enough for both of you! You do not have a complete control over your account, so don’t expect to, for example, be able to withdraw your money at the tip of a hat.

Most clients give their money manager complete control over transactions made in their managed forex account, although you can often instruct the money manager on the strategies and trading signals you would like them to consider as they trade on your behalf. This effectively takes you out of the trading picture so you can avoid the emotions and psychological issues that accompany winning and losing trades.

Remember, not all forex brokers are created equal, so carefully consider your needs and broker features before you open an account. Furthermore, if you wish to have someone else manage your forex trading account, be sure they have adequate training and infrastructure at their disposal as well as a respectable track record as a trader.

Keep in mind that once you open a managed account, account managers will generally have minimum time and deposit requirements and sometimes charge penalties for early fund withdrawal.  Minimum deposits for these accounts can also be considerably higher than for a standard forex account.

PAMM, LAMM, & MAMM Accounts

These types of accounts use sophisticated technology to distribute profits, losses, and fees based on percentages of funds each investor has involved in the master account used for trading. These account methods are relatively new in comparison with the other two listed here, and offer the satisfaction of dealing directly with the broker of your choice in a secure and transparent way.

It’s similar to the mirror and copy trading features some brokers offer, because of the automation and technicality. Although, it still has more similarities to a managed account. All these types of accounts are basically pool accounts, in the sense that numerous investors pool their money together and reap the profits or losses of the money manager.

 

WHAT IS A PAMM ACCOUNT?

PAMM Account in Forex trading is also known as a Percentage Allocation Management Module Account.  It is a software solution that allow traders and investors to attach a sub trading account to a specific money manager or asset manager’s “master” account. The sub account will take the same trades as the master account using the same % risk, or a multiple of the risk %.

WHAT IS A MAM ACCOUNT?

MAM Account in Forex trading, also known as a Multi-Account Manager Account, is a solution that allow forex traders and investors to become part of a “pool” of sub accounts traded through a “Master Account“.   The total trading capital in the master account is equivalent to the total of all the sub accounts, and profits are distributed according to the contributions to the master account. This is all calculated by the broker each month.

WHAT ARE THE ADVANTAGES OF USING FOREX MANAGED ACCOUNTS?

  1. No Commitments or recurring subscriptions fees
  2. No Performance fees unless profits are made on the account
  3. Performance fees are calculated on a High Watermark policy
  4. Does not require any trading experience at all

Example of Managed account features and conditions with Dukascopy broker:

Forex Managed Account is a leveraged investment for speculative currency trading. Due to leverage applied to the invested funds, potential profit of trading activity can reach hundreds of percents while unique Dukascopy Bank technology allows to limit maximum risk and protect the client. The key point for investor is to choose the correct trader and to control trading activities.

Dukascopy Bank provides its clients with solutions enabling clients to appoint a trader on their account. To support this activity, Dukascopy Bank has created the unique environment, based on the following main features and priorities:

  • Choice of base currency of the investment (USD, CHF, EUR, GBP, JPY, AUD, CAD, DKK, ZAR, MXN, NOK, NZD, PLN, RUB, CNH, SEK, SGD, TRY and HKD), to avoid the risk of devaluation
  • Choice of funding facilities and depositary institutions, including Dukascopy Bank itself, allowing to control stability of custodian
  • Immediate Trading Deactivation allows Investors to block trading on their managed accounts at any time with immediate effect
  • Equity protection: the Stop Loss Level functionality provides Investors with control of risk of loss. Investors are given the possibility to block trader's activity beyond a certain drawdown level
  • Instant 24/7 reporting access to the account statements allows investor to monitor the trading activity on the managed account online

Sophisticated reporting and a wide range of management tools in combination with Swiss regulatory environment and unique access to ECN liquidity of Swiss Forex Bank & Marketplace create adequate investment environment.

Forex account manager is a concept some people are not comfortable with, maybe because of the negative stories or probably a bad experience, but forex account manager is still a productive concept and the service is available mostly for individuals that are too busy to manage their account or just can't manage it for one reason or the other. So if an investor have to use forex account manager he/she has to know the in dept criteria for choosing an account manager.

Who is forex account manager?

A forex account manager is a professional trader hired at an agreed percentage to manage an account for an investor. The manager is not permitted to deposit or withdraw from the account but he/she is permitted to make the trading decisions and orders transparently based on a grant of limited power of attorney which could be withdrawn from the account manager at anytime by the owner. Using a forex account manager do not prevent the owner from viewing account balance whenever he/she wants or obtaining a full rundown of the activities of the account and also adjust the funding of the account as desired.

How to choose a good forex account manager?

  • REGULATION

While choosing a forex account manager it is important to consider whether or not the manager is registered under the regulatory agency of the country in which they operate, at list to the assured the forex account manager is a professional and that he/she can do what they claim to do.

  • BACK TRACK RECORD

Prior to choosing a forex account manager it is also necessary to do a back check on the managers success record, performance over a long period of time, competence and if they take a percentage of the responsibility for the lost of a client in trading and not just a someone greedy for personal gain and benefits.

  • RISK ASSESSMENT

It is also important to assess how much risk the managers takes before hiring one, as some managers take unnecessary risk since the account is not funded by them which is unhealthy mostly for a trader without large capital.

Advantaged of Forex Account Manager

TIME

One of the most treasured advantage of having a forex account manager is the freedom of time it gives to engage in other things and been rest assured that your stock is doing well, mostly in cases where one succeeded in hiring a good Forex account manager.

EXPERIENCE

In forex trading, one of the most treasured qualities is experience, and a good Forex account manager with experience is a great advantage, since due to his experience profit will be maximized and lost reduced.

Disadvantages of trading with a forex account manager

Mismanagement of funds

Sometimes due to the fact that the account manager is not the one funding the account the manager might take uncalculated risk which is unhealthy in forex trading.

Lack of growth

No matter how good a forex account manager is, the owner of the account is still at lost since he/she is not developing, which signifies constant dependence as long as the investors career last, which is not idea.

 

Summary

My suggestion is to avoid managed accounts, but if it is inevitable make sure you know exactly what you are getting into – find out everything you can about fees and commissions, terms and regulations, withdrawal conditions and, of course, get some kind of proof that the account supervisor is, in fact, professional.

If a trader wants to participate and make money trading in the forex market but does not want to trade themselves, a managed forex account could be a perfect fit.  Traders should keep in mind that, in addition to significantly higher minimum deposit requirements, traders could potentially be charged anywhere from 15% to 40% (or even more) of their profits. Traders may also have to pay brokerage and additional manager fees, depending on the account specifications.  In contrast, if a trader lacks sufficient risk capital for a managed account or prefer to trade their own money, then they may be better off trading in a regular forex trading account, especially if they already have a viable trading strategy.