Best Managed Forex Accounts 2024

Managed Forex Accounts

To make money in the forex markets today, you do not need years of experience, unquestionable knowledge of this complex market, or even the time to keep a close eye on your trades. Your biggest decision could be choosing which money manager to put in charge of your trading account; and if you make a great choice, you can just sit back, relax, and watch as the profits pour in.

Managed forex accounts, alternatively called PAMM/MAM and LAMM accounts, have finally come of age. The number of brokers who offer managed forex account services is quite extensive. But, do you know as much about managed forex accounts as you think you do? Read on to find out.

Managed Forex

What Are PAMM / MAM & LAMM Managed Forex Accounts?

There are different types of managed forex accounts, including PAMM, MAM & LAMM. PAMM is just an acronym for Percentage Allocation Management Module, which is similar to yet another acronym MAM, or Multi-Account Management in full. LAMM, on the other hand, stands for Lot Allocation Management Module. You will notice that each of these fairly confusing terms feature the word management.

This is because a PAMM, or a MAM account if you prefer, as well as a LAMM accounts involve a single trader managing several trading accounts on someone else’s behalf. Think of it as an improvement on the traditional fund manager, with the main difference being that the whole system is hosted online. So, rather than visit a brick-and-mortar office to talk to a fund manager, you simply search the internet for a trader who knows his way around forex trading and let them make trading decisions, and profits, for you.

Differences Between PAMM / MAM & LAMM Managed Forex Accounts

PAMM Accounts

With a PAMM managed forex account, lot sizes are allocated to individual accounts based on their percentage contribution to the entire PAMM account. However, while MAM could use percentages as a basis for lot allocation to sub accounts, other means can also be used to determine what proportion of lots are assigned to an individual account. For instance, on a MAM account, the manager can assign fixed lots to a specific account regardless of the lot size traded on the master account.

MAM Accounts

So, as a money manager, you can decide to allocate certain accounts a greater percentage of the traded lots when using a MAM account, if they have opted for a higher risk appetite. This is not something you can do when operating a PAMM account whereby if an account contributes 10% of the fund, it has to get 10% of the lots traded. But with a MAM account, an account that contributes 10% of the fund’s capital can get an allocation of less than or more than 10%. With a MAM account, you can also use a greater level of leverage on certain accounts depending on the amount of risk the account owners are willing to take.

LAMM Accounts

LAMM differs from PAMM in that gains and losses are allocated to individual investor accounts based on lots rather than percentages. LAMM allows better management of individual accounts in comparison to PAMM. By offering this flexibility, LAMM is actually a lot more similar to MAM than PAMM, except that it exclusively uses lot allocation while MAM also uses percentage allocation.

If you know a thing or two about a PAMM/MAM account, then its appeals should be quite obvious to you. The most important benefit of a PAMM account as an investor is that you do not need to trade the markets yourself. Learning to trade successfully in the markets is something that can take several months, if not years. Unfortunately, most people get into forex trading, not to spend months learning how to succeed as traders, but to make money as soon as possible. Using the services of a PAMM money manager reconciles these divergent goals.

Advantages Of Investing In A PAMM/MAM Account

Another major benefit of a PAMM account is that you will not have to spend time everyday analyzing the markets or tracking your trades – someone else does this on your behalf. This can be especially appealing to advanced traders who lack the time to trade the markets themselves, but would still like to reap its potential rewards.

PAMM accounts also allow you to exploit trading benefits you would not have when subscribed to a social trading signal. For instance, if the trader you are following uses scalping methods or robots, a PAMM accounts is better than a social trading signal since you will not have to experience delayed order executions that would be detrimental to your returns under this trading methodology.

How To Choose A Good PAMM / MAM Money Manager

Choosing a good PAMM/MAM money manager is easier said than done. The reason for this is simple, most PAMM accounts fail after some time, and with them goes the investors’ money. So, you need to choose your PAMM money manager wisely if you are to remain profitable over the long-term. Here are some pointers on how to ensure you have the right PAMM/MAM money manager in charge of your forex market investment. Please note that neither of these factors offer a satisfactory assessment of a manager’s trading abilities on its own – you should consider all the factors in tandem.

The Total Profit The Manager Has Made So Far

This is the factor most traders go for when assessing a PAMM money manager’s performance. Generally, a high profit is an indicator that the manager has an effective strategy that is able to deliver great results, at least up to that point in time. Since the ultimate goal of being part of the forex markets is profitability, this is a very important metric.

How Long Has The Managed Forex Account Been Up And Running

Do not overlook the ability of a fund to perform over the long term. Most funds that fail do so not long after their establishment, and those that do survive are usually under very good management, and usually maintain their profit-making streaks for several months or years.

Amount Of Money The Manager Has Invested Into The Fund

You are better off entrusting your money to a PAMM money manager who has no qualms about betting their own money on their trading skills. If a manager does not put a lot of their own money at risk, it is probably a sign that they do not have much confidence in their ability to survive the markets: try to avoid such PAMM managers.

Consider The Manager’s Risk Levels Using Drawdown And Leverage

Risk management is what makes or breaks a trader. A money manager who has a good handle on the risk he/she takes while trading is someone you can count on not to lose your money even if the market renders the strategy they are using unsuccessful. Avoid accounts with very high drawdowns or very high leverage, that usually indicates high levels of risk.

Advantages Of Becoming A PAMM / MAM money Manager

Becoming a money manager using a PAMM managed forex account has its perks, if you can overlook the nuance issue of having the fate of other people’s money in your hands. The first benefit of being a PAMM account manager is that you will get fees for your trading skills beyond the profits you will be able to make while trading your own account. The investors whose accounts you manage usually pay a commission on profits ranging from about 20% to well over 70%.

Nothing puts you on the fast track to being a successful trader than being responsible over other people’s money. Every decision you make while managing a PAMM account will be considered carefully with regard to risk-reward to ensure your clients’ money stays safe at all times. You learn how to be a disciplined trader and most of all, a successful trader.

Brokers also give you special trading privileges when you operate a PAMM account. So, if trading is truly your passion, you will love being able to enjoy trading conditions that regular account holders do not have. For instance, your trades will be executed faster, you can enjoy better prices, the broker’s support will be extra helpful, and you can even have someone assigned specifically to you.

Pros/Cons Of Investing Using Managed Forex Accounts vs Using Copy/Social Trading Or Signals

Pros

Unlike most trading signals, managed forex accounts have less slippage. A managed forex account is considered a single unit, which means the investors’ accounts enjoy the same trading conditions as the account manager. With a typical social trading signal, slippage is usually a big issue. In fact, when using some brokers, the slippage may even cause you to experience losses as your signal provider reports a profit.

Another benefit of a managed forex accounts over a typical signal subscription using a signal provider is that you will pay only for the profit you make. With signal services, you usually pay for the signal service based on volume, or periodic subscriptions. This means that even if your signal provider makes a loss, you will still spend something extra on monthly fees or volume-based subscription fees.

Cons

Social trading and signals are just so much easier to use than managed forex accounts. Signal subscriptions are available through well-established communities such as those found on eToro and ZuluTrade, where you will have at your disposal many tools that will make the entire process of subscribing to signals so much easier. Using managed forex accounts, on the other hand, is a little bit harder.

Social trading is more readily available than investing in managed forex accounts. Managed forex accounts are not as easy to find, Some brokers offering the services do not even have a platform through which investors can exploit these services. However, social trading in forex markets is virtually everywhere. Even MT4, the standard forex trading platform, offers access to a vibrant social trading community where you can subscribe to trading signals.