Managed Forex Accounts – low minimum managed forex trading

Managed Forex Accounts Manager

How to decide on the various managed forex accounts, and what are your alternatives?

During this guide to managed forex accounts we are going to delve into the details. We will begin with looking at what is a managed forex account, what are PAMM, MAM and LAMM and how do to choose which one is right.

Once we have evaluated the various things to watch out for, as far as managed forex account scams are concerned, we can look at the best brokers’ offers.

Are there are some alternative options we should be considering alongside forex account managers for optimal performance and low minimum deposits? All answered below.

What is a Managed Forex Account?

Managed forex accounts are exactly what it says on the label. It is a trading account that is professionally managed by an expert Forex trader.  

The professional trader will manage your money portfolio and make trades on your behalf.  This could prove particularly useful to clients who would like to diversify their investment portfolio, but are not too familiar with forex or trading.  

Why do people use a managed account service?

It could be that you may not have the experience of trading forex online. It could be that you do not have the time to watch and trade the forex markets across the various trading sessions. In cases such as these, a managed forex account may be quite beneficial for you.

On the other hand, if you are an authoritative trader, and are used to making all of your own decisions, a managed forex account will probably not suit your personality, or trading style.

There are different types of managed forex accounts that allow various levels of control for both account holder (you) and account manager. We will delve into these below

As with any professional service, there is a fee that will be charged for this that you need to weigh against the benefits.

What are the fees with Managed Forex Accounts?

A managed Forex account will usually incur higher fees and have larger costs than a regular trading account where you are able to make all your own independent trading decisions.  

The increased costs that come with a Managed Forex Account are justified since you are paying an experienced trader who will more than likely have years and years of Forex trading experience to offer.

The fees payable for a Managed Forex Account differ from broker to broker.  It is usual practice for the broker to charge a performance fee, somewhere between 20 and 30% of a single traders’ profits. With the performance fee, there is also a minimum deposit for opening a Managed Forex Account.

Managed forex account minimum deposits are definitely higher than an individual trading account as the professional trader would need a minimum amount of money to execute trades. 

Some providers that we have looked at also restrict withdrawals between 12 to 36 months, and may charge early withdrawal fees too.  With all these increased costs, you may want to fully evaluate all the options available.

How do I choose between the various options for Managed Accounts?

Choosing a broker to manage your Forex account is like interviewing any prospective employee or service provider.  

Ensuring that you check their background, average account performance and past experiences are a given. Also, it is always worth evaluating performance against an average market return to ensure they are outperforming the average during the timeline you are looking at.

The next step, which could very well be the most important is to ensure that the broker you are interested in is properly regulated by the appropriate agency.  It is imperative to take these safeguarding steps before handing over any money, or control of your financial portfolio. 

Managed accounts involve a lot of paperwork and you have to sign a Limited Power of Attorney agreement (LPOA) which should provide you with a certain peace of mind.  The LPOA allows the experienced trader to access your account solely for the purposes of trading.  They cannot withdraw any money from the account.  Unless there is a fixed term to your agreement with the account manager, you would be in complete control of your account.

What are the different types of Managed Forex Accounts?

There are 3 main types of Managed Forex Accounts that we are going to look at here, PAMM, MAM and LAMM.

If Managed Forex Accounts are a suitable way for you to move forward with Forex trading, it is highly advised to school yourself on the different types available:

  • Percentage Allocation Management Module (PAMM
  • Lot Allocation Management Module (LAMM
  • Multi Account Management Module (MAM

Percentage Allocation Management Module

PAMM is a form of pooled money Forex trading where multiple people pool their money together and allow a professional trader to handle the managed Forex Account. Often these traders will pool in their own money into the PAMM account to give them a vested interest to ensure profits are made.  These trades are made on the same brokerage software that allows transparency and full control to the investor.  

With this, the professional Forex trader will receive a percentage of the profits made, and also a percentage of the profits made as per the managed Forex Account agreement.  All the other investors will receive a percentage of the profits after the money manager/trading manager has taken his fee. 

Everyone that has pooled money into the PAMM account can decide at the end of each trading period whether or not to withdraw the funds or reinvest the money. PAMM accounts are popular with investors as there are many of these existing accounts to choose from on their usual trading platform that they can join and leave at their leisure.

Lot Allocation Management Module

LAMM is very similar to the above PAMM account, but instead of the profit being divided out according to percentage, the profits are divided by lots. This means that the investor can control how much they invest in separate lots and put more emphasis on certain particular lots over others. This works well for the investor because they can allocate risk and prioritise different lots.  LAMM is not commonly offered by online brokers any longer and is more of a predecessor to PAMM which is easier to understand.

Multi Account Management Module

MAM accounts allow the money manager more flexibility in assigning leverage to specific accounts.  This is especially useful if the investors that have been pooled together have different risk profiles. 

Clients who have higher risk tolerances usually favour this managed forex account as they are able to extract the reward from the range of risk they are happy with.

MAM accounts are also popular with money managers because of the flexibility afforded by the varied client appetite for risk and the option to assign different leverage to each account based on aforementioned risk profile. 

forex managed accounts now operate on broker platforms, removing the nee for paper ledger
Managing forex accounts without the paper ledger

Which account type is the best choice?

When looking at each of all the managed forex accounts above, the main goal of the investor usually is to be hands off and allow someone else (hopefully a professional who knows exactly what they are doing), take care of the performance.  The main differences are really the mechanisms that the actual trader can use in order to reach performance and optimise to each individual investor need.

There is really no best managed forex account type for all people, just differences. Whatever your preference in style of managed forex account, you need to be careful of checking who are the best forex account managers and which broker account will provide you access.


Forex Trading Scams, what to look out for

It is essential to watch out for scams when considering forex account managers. Particularly if you are approached by an account manager, or you see a flashy ad promising amazing and guaranteed returns, you need to be particularly mindful. Usually it is better that you source your own account manager from a trusted broker to ensure that you are not falling into a trap.

There are many unregulated brokers out there and it can be tricky to navigate and find safe managed forex accounts. As mentioned previously, doing your homework, investigating backgrounds, past experiences and with which forex regulator the broker is registered with is a must.

You should also watch out very carefully for the following:

  • No guarantees but death and taxes,
  • No hesitation when it comes to regulation,
  • Due diligence is definitely due vigilance.
  • An approach out of the blue, it’s not for you.

Forex Scam Warning 1 – Promised or guaranteed returns

Whichever the market being traded there are no guaranteed returns. that is savings accounts. If you have a forex account manager or an offer that provides a guaranteed return each year or month then we would advise you consider very carefully whether they are a scam.

If returns and the markets were so easy to predict down to % returns, then why are they not already multi-billionaires and enjoying life on their own tropical island like Richard Branson?

Previous performance of a trader on a forex managed account is important as it will tell you how they have done in the past, it is not however an indication of future performance.

If someone is paying out fixed returns as a guarantee there is the potential of a ponzi scheme or something nefarious going on where new investor funds are used to pay the ‘profits’ of the earlier investor accounts.

No guarantees but death and taxes.

Forex Scam Warning 2 – Unregulated firms targeting regulated countries

Specific countries such as the UK, Australia, are more targeted by fraudsters. Any proper forex broker and managed forex account needs to abide by the local jurisdiction that they are operating in.

If a forex broker is marketing in either of these countries as best forex managed account UK or Australia, they will need appropriate regulation.

Any broker without FCA (or European equivalent), or ASIC regulation is likely marketing inappropriately, or at worst illegally, and in breach of local regulatoratory laws.

No hesitation when it comes to regulation.

Forex Scam Warning 3 – Strange payment method requests

When you find a forex account manager that is requesting you deposit funds via cryptocurrencies, or some other form of untraceable payment, you should immediately be on caution. Any request for payment that is not giving you full confidence of legitimacy, it is always advised to check this out in detail beforehand.

Depositing into an account name which does not reflect the expected name of the broker or one of their listed operating entities is another red flag.

It is advised to check online for forex scams and reviews, search the name of the account manager and do your due diligence to ensure you are comfortable first and foremost.

A managed forex account is supposed to make it easier for you to navigate the forex markets profitably, not make it easier for scammers to get hold of your hard earned money.

Due diligence is most definitely due vigilance.

Forex Scam Warning 4 – Someone approaches you with the offer of a lifetime

You have just been approached (usual via social media or a telephone call) out of the blue. It is the offer of a lifetime. An offer so good it is hard to believe…

Usually these scams are quite sophisticated, and the fraudster in these cases may even have a name that sounds remarkably similar to an established or trusted broker, or could even be a clone of an actual broker. Regulated brokers cannot call you unless you have specifically requested them to, therefore an unexpected call is not a gift from above but rather a likely attempt to defraud.

Check your regulators’ site

If you are in doubt, check the regulatory body website and take a look for the name of the company that has contacted you. You will find a link to the FCA and ASIC warning sections here below that is easy to navigate. There are similar lists on each of the local regulators.

https://www.fca.org.uk/consumers/unauthorised-firms-individuals
https://asic.gov.au/online-services/search-asics-registers/additional-searches/public-warning-notices/

It is likely that if a broker is targeting residents in your country, there will be a warning prepared. Be forewarned and do not take for granted if you do not see one that it is safe, as they may only have just started this particular scam. Trust your instincts.

An approach out of the blue, it’s not for you.

Forex Scam Warning Summation

The points above are not an exhaustive list of the scams to be aware of.

Unfortunately, fraudsters are becoming more and more sophisticated, and are coming up with new ways to defraud the general public every day.

It is always best to keep your wits about you, do not trust everything you are told. Even if it is coming from someone you know, they may also be a victim, on the receiving end of early ponzi scheme returns, as one example. Always use regulated and trusted brokers.

We have put together a list of trusted account managers for the different areas our users usually originate from.

If you do not see your country here and would like some additional ones added, please feel to reach out to us and request it.


Managed Forex Accounts UK – which UK brokers are trusted, regulated and have managed account options

All the below options for trusted account managers in the UK will have regulation from FCA, CySEC or another recognised European or Tier1 agency.

The specific forex account managers that the broker can provide will vary in results as you would expect, but the brokers themselves will provide a trusted platform.

FXTM are FCA regulated and have a range of ‘Strategy Managers’ available to choose from under their FXTM Invest range. You can see performance, risk level and amount of balance under management very clearly.

VISIT FXTM | Read Full Review

BDSwiss are CySEC regulated and have a range of forex account managers that you can choose from. It is very transparent to see with BDSwiss which account manager you are going to get and their past performance.

VISIT BDSWISS

ATFX are FCA regulaed, offer a strong range of account managed services, and have offices in London.

VISIT ATFX | Read Full Review

HFEU (European office of HotForex) are CySEC regulated and have good options for forex managed accounts.

VISIT HFEU

Avatrade are one of the most regulated brokers on the market and have CBI regulation (Bentral Bank or Ireland) to cover European traders. Avatrade offer MAM accounts for the account managers out there.

VISIT AVATRADE

Managed Forex Accounts Australia – trusted brokers with managed account options

Our Managed Forex Accounts Australia list will only include brokers with appropriate ASIC regulation and a strong record of compliance locally. Similar to our UK list, the account managers will have varying track records but the brokers are trusted to deliver the best platforms for managed forex accounts to operate on. 

Pepperstone have ASIC regulation, local Australian offices and PAMM/MAM solutions you can take advantage of.

VISIT PEPPERSTONE | Read Full Review

Avatrade hold ASIC regulation and offer MAM accounts for the professional account manager to use.

VISIT AVATRADE

Managed Forex Accounts, An Alternative For Low Minimum

If you are searching for alternatives to managed forex accounts, then there are some other options that can help to satisfy a similar goal. With the main goal of users considering managed forex accounts being, to have a hands off approach, copy trading, or social trading as it otherwise known, can provide the same experience but with a few notable differences.

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Copy Trading VS Managed Forex Accounts

Fees

Fees are usually around 20% of profit on a managed forex account and some copy trading portfolios will have fees of up to 10% of profits made. Copy Trading with eToro (the industry pioneer) has no charges to copy a trader or portfolio as eToro make their money on the spreads between buy and sell on all trades. eToro will pay the copied trader a commission of the spreads they earn so that you don’t have to.

Winner – Copy Trading

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Expertise of followed manager

This can vary wildly on copy trading or social trading platforms. There is no guarantee that the person you are following has any more understanding about the forex market than you do (which is why the track record of any account you follow needs to be investigated in detail and you should take into account at least the past 18 months and evaluate against standard market performance in the same duration). The expertise forex account managers operating a managed forex account will likely be much more established and they will usually have a professional level of trading ability.

Winner – Managed Forex Accounts

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Account size needed (Minimum Deposit Required)

Most of the stronger managed forex accounts will require minimum account sizes of between £1’000  to £10’000 in order to be eligible for their services.

There are some options of managed forex accounts with low minimum but not many that you have a selection. When it comes to social trading or copy trading, you can usually start your account with as low minimum as £10-£200 depending on the particular broker minimum deposit.

If you are planning to deposit north of £10,000 to get your account started then a managed forex account could well represent the best option but for most novice traders looking to start out, having the flexibility to start your account with much lower figures is a massive advantage.

Winner – Copy Trading

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Third party risk

There is always a risk associated with a having a third party responsible for your funds but this risk can be amplified if the interests of all sides are not aligned. What we mean is that in the scenario where the followed person, in this case a forex account manager, is only paid a % of your profits and trades their own funds alongside your own, you can feel confident that this persons’ interests are directly aligned with your own.

In the case of copy trading, where the followed account earns commission based on the volume traded, their interest could be conflicted in moments where they are not certain about a trade but would rather have activity or volume than not trade at all. It could be said that if this were to happen and the followed user were to have poor performance that they will no longer have any followers and thus their income would be lost.

Whilst you may not encounter any user who would ever trade based on a conflict, there is more potential for one to exist in the case of Copy Trading. If you would like to know more about forex risk find some help here.

Winner – Managed Forex Accounts

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Flexibility/Tie-in period

Some managed accounts will require you to commit your funds for a specific time period so that the account manager has time to work their strategy and is not so impacted by any short-term fluctuations in performance. These time periods can range from 1 month to 1 year in some cases (but not all). The flexibility offered by copy trading is significantly greater as you can effectively follow multiple different traders with varying underlying asset interests and pick and choose when to start or stop following in an instant. If you know you are not going to have any need of your funds for at least that predefined period then the managed account will not provide any issue but looking just from a flexibility standpoint there can only be one winner.

Winner – Copy Trading

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Copy Trading – The narrow winner.

Best Copy Trading Platform – eToro Copyportfolios

Best Trading App
No Trading Commissions

eToro are the industry pioneer and have both the strongest copy trading platform and the widest range of portfolios to follow. This coupled with the fact that eToro have great usability, the option to trade on desktop or mobile devices with equal ease, and are widely renowned to be the best in the copy trading sector makes this an easy win. If you are looking for an alternative to eToro, feel free to check our list of best copy trading platforms in our best brokers section.