Best Forex Managed Accounts
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What if you are really interested in investing in the forex markets yet feel daunted by the overwhelming amount of experience and knowledge required for trading successfully? Well, this is where managed forex accounts come into the picture, mimicking something quite similar to a hedge fund.
Managed forex trading accounts have been a major sector of the industry for some time now, along with copy trading. Clients with no experience speculating in the markets can replicate the performance of some of the smartest and talented minds with much better know-how; this is one of the main objectives of managed forex accounts.
While this avenue shows incredible lucrative potential, there is still a learning curve to overcome. Hence, we’ve created this in-depth guide covering all the important aspects of managed accounts and the best options for you to consider.
Top 6 Best Forex Managed Accounts
Now that we’ve provided some helpful information on such services, let’s dive into the five best managed forex accounts (in no particular order of importance):
We’ve prepared this list to aid and fast-track your search for the most suitable forex managed account, considering the broker’s regulation, track records, credibility, services, and other important information.
1. TechBerry
Established in 2015, TechBerry is a social trading platform that ensures the safety of subscribers’ funds through FIDC-insured banks. To generate phenomenal returns on your capital, it uses its deep learning algorithm to produce a profitable strategy that provides over 10% each month. The drawdown is minimal, and the loss reimbursement makes everything risk-free.
To monitor the current performance of the neural algorithm, subscribers can witness the real-time trade monitoring on the website. A free trial is also at hand to test the service before joining. The fees are pretty low, starting at $19 per year for the Green plan within a minimal $5000 in funds.
The platform has a partnership with multiple reputed brokers that come under the regulation of noted authorities.
Pros
- High return over 10% each month
- Low service fees
- No country based restriction
- Easy to use online interface
Cons
- Supports only MT4 and MT5 for data collection
- No information on strategy, as its updated by AI
2. FP Markets
Founded: 2005
Location: Australia
Currency Pairs: 60+
EURUSD Spread: 0.1 pips
Leverage: Up to 1:30
Established in 2005, First Prudential or FP Markets is an Australian-based broker with regulations from ASIC (Australian Securities and Investments Commission) and CySEC (Cyprus Securities and Exchange Commission).
The brokerage offers trading services in forex, equities, metals, commodities, and indices using the MT4 and MT5 platforms. For managed accounts, they provide PAMM and MAM. Clients can start with a minimum deposit of AU $200 through MT4, utilizing intricate and transparent multi-account management solutions.
With all the must-haves of any recognized broker, including top-notch execution speed, world-renowned trading platforms, a sizable selection of markets, and impeccable client servicing, FP Markets is a notable option for one of the best forex managed accounts.
Pros
- Regulated by ASIC and CySEC
- Flexible leverage provided
- Broad variety of funding options available
- Wide selection of tradable forex markets provided
Cons
- No information on performance stats and fees
- Negative balance protection not available
3. Pepperstone
Founded: 2010
Location: Australia
Currency Pairs: 60+
EURUSD Spread: 0 pips
Leverage: Up to 1:30
Pepperstone was established in 2010 in Melbourne, Australia, but its name is known across the globe by traders. The brokerage prides itself on brilliant customer support, cutting-edge trading products, and reasonable trading costs.
As a result, the multi-regulated brand processes about $9 billion in trading volume every day, a figure that is rivaled only by a few. Pepperstone has headquarters in Australia, and offices in Kenya, Cyprus, Germany, and London.
With a recommended minimum AU$200 investment, non-trading clients can use Pepperstone’s PAMM service or become MAM managers with the relevant trading experience. These accounts permit all strategies with customizable allocation methods, popular order types, and lot sizes beginning from 0.01.
Pros
- Regulated by several globally recognized authorities
- Provides numerous types of accounts, including copy trading
- Fee-free deposits and withdrawals with broad funding choices
- Great range of forex markets offered
- Several platforms available
- Many base currencies to open your accounts with
Cons
- No upfront information provided on performance statistics and fees
- Negative balance protection not available for customers outside the EU and UK
4. Dukascopy
Founded: 2004
Location: Switzerland
Currency Pairs: 60
EURUSD Spread: 0.7 pips
Leverage: Up to 1:100
Dukascopy is a highly regulated, secure, capitalized Swiss-based bank and online trading brokerage catering to active retail and professional traders, banks, and hedge funds. Aside from its headquarters in Geneva, Dukascopy has offices in Tokyo, Moscow, Kyiv, Riga, and Hong Kong.
The broker provides transparent execution. Forex accounts are fundable via bank transfers and credit/debit cards with a minimum $100 deposit. Potential clients and money managers can open PAMM/MAM accounts with different base currencies on MT4.
The back-end functionalities are pretty technical, allowing users to control an unlimited number of managed accounts using various allocation ratios. Execution across multiple accounts is as seamless and uninterrupted as using an individual self-directed account.
Pros
- FINMA-regulated, secure, and highly capitalized
- Deposits accepted in 23 currencies
- Offers 24/6 telephonic support
- $100 minimum deposit
- Wide range of forex markets available
Cons
- EU clients are charged for card deposits
- No upfront information provided on performance statistics and fees
5. AvaTrade
Founded: 2006
Location: Ireland
Currency Pairs: 55
EURUSD Spread: 0.9 pips
Leverage: Up to 1:400
AvaTrade is an Ireland-based derivatives broker founded in 2006 that has continually carved its vision of reliable user-centric trading provision. The brokerage has additional offices in several other parts of the globe. AvaTrade allows hundreds of thousands of clients worldwide to trade currencies, ETFs, options, stocks, cryptos, indices, and commodities.
The broker provides an intuitive platform for their managed accounts that allows users different allocation types and adjust the balance, lot sizes, percentages, etc.
The minimum deposit starts from a decent $100, and the opened positions begin from 0.01 lots. Overall, AvaTrade is an intelligent choice for anyone looking for some of the best managed account solutions in forex.
Pros
- Multi-regulated with offices in 10 currencies
- Clients can open accounts in several base currencies
- Provides excellent educational material
- Offers a copy trading service aside from MAM
- Costless funding and withdrawal
- Reasonable minimum deposit
Cons
- No upfront information available on managers’ performance and fees
6. FIBO Group
Founded: 1998
Location: British Virgin Islands
Currency Pairs: 48
EURUSD Spread: 0.5 pips
Leverage: Up to 1:400
The FIBO Group (Financial Intermarket Brokerage Online Group) is a financial holding company and derivative provider founded in 1998, making it one of the oldest brokers.
FIBO provides trading access to 48 of the most popular currency pairs, along with 1:400 maximum leverage, fast deposits and withdrawals, several account types, the most recognized platforms (MT4, MT5, and cTrader), and qualified customer support.
The company holds regulatory licenses from several regions with offices in Cyprus, Germany, the British Virgin Islands, Singapore, China, Kazakhstan, and Russia. Like most brokers, FIBO provides a PAMM account for both investors and managers.
The latter can choose from hundreds of PAMM agents with no limit on how many accounts they invest through. Investors can open a PAMM account from $50 on MT4.
Clients only pay a performance fee when managers make a profit at the end of the investment period or for early withdrawal. Overall, they provide one of the top, and most transparent forex managed accounts.
Pros
- Been in existence since 1998
- Several funding mechanisms provided, including Bitcoin
- Provides numerous account types on MT4, MT5, and cTrader
- Minimum $50 deposit
- Offers real-time performance stats and ratings for potential investors
Cons
- Limited educational resources
- No upfront information provided on fees
What is a managed forex account?
A managed account in forex involves a designated ‘portfolio manager’ or experienced trader taking positions on behalf of an investor or group of investors for a performance commission.
Most managed forex accounts are provided by brokers who vet the expert trader based on predetermined risk and performance-related metrics. Hence, the parties involved in a managed account include a broker, expert trader, and typically a pool of investors with various monetary contributions.
Importantly, positions taken by the expert trader are automatically copied onto the investor/s account/s without any manual intervention from the latter. Although the ‘master’ account combines all the deposits from clients, managers have no access to the funds.
Investors rely on bespoke technology to achieve the seamless and computerized copying of the positions, prevent fraud in the profit distribution, and funds tampering. Hence, forex managed accounts come in different forms based on the allocation module/profit distribution and management model, which will be covered next.
PAMM (percentage allocation management module)
PAMM is the most popularly offered managed forex account. So, what is PAMM? A PAMM account distributes profits as a percentage relative to each investor’s contribution.
For instance, if two investors have contributed $1000 each (totaling $2000) in the fund, they would receive 50% of the profits; if three joined, the allocation would reduce to 33%, and so on. As more people join the pool, the percentage allocation diminishes accordingly.
LAMM (lot allocation management module)
A LAMM account is the least popular option provided nowadays, though it is the predecessor to PAMM. LAMM works similarly to the latter in the autonomous copying of trades from a ‘master account’ and in the ability to allow multiple accounts to invest within that LAMM.
Yet, the main distinction is rather than profits being split based on a percentage allocation of the contributions, and investors receive gains on the multiples of lots traded. Here, you would choose the number of lots to allocate in the markets.
LAMM is used for clients with larger trading capital for liquidity reasons. Liquidity becomes an issue with substantial account sizes as brokers may not always be able to fill orders in the entirety of the traded lots.
RAMM (risk asset management model)
The RAMM account is a recently introduced managed forex account incorporating elements of PAMM and copy trading. Introduced by NordFX in June 2018, RAMM allows clients to copy from several RAMM managers on one portal, similar to a copy trading service.
One of the main distinctions between PAMM and RAMM is the latter allows you more capital protection. With traditional PAMM, you often cannot determine a specified drawdown limit as it’s based on the manager’s performance. Yet, RAMM allows this feature automatically, hence the term ‘risk asset management.’
MAM (multi-asset manager)
The previously mentioned managed accounts are all client-facing. MAM is used by the designated managers to manage the sub-accounts from their respective sources in one fund easily. Furthermore, these individuals can use different predetermined allocation methods to employ more complex leverage and risk distribution across these accounts.
Hence, the MAM is for the money managers chosen by the brokers and not for investors. Depending on the requirements, some brokerage may require the potential manager to have some form of license to manage other people’s money and some years of trading experience with a proven profitable track record.
How to use forex managed accounts?
There are two kinds of people using managed forex accounts; experienced and newbie traders. A trader who has some knowledge of the markets can benefit from such services as a diversification strategy.
This group may already be profitable in their own trading methods and would look to divert some of those profits to an uncorrelated strategy from a more skilled trader. Newbie traders who have no or little experience with forex can also use managed forex trading accounts to save time learning about the markets from scratch.
Ultimately, you can consider managed forex accounts as a means to add another strategy to your existing one if you already know about forex or seek to profit from the skills of others without being embroiled in the technicalities of this financial market.
Advantages and disadvantages of forex managed accounts
Let’s briefly look at the pros and cons of managed forex accounts:
Pros
- The biggest benefit is it allows investors to profit from the markets without any work and in-depth knowledge on their part. Hence, managed accounts function quite passively, assuming the managers are performing well.
- Investors have full access to their funds in the managed account when money hasn’t been allocated to a trading position.
Cons
- The biggest disadvantage is the trading decisions lie at the discretion of another trader rather than the investor. Moreover, past performance is not an accurate indication of exact future results.
- Without the proper research, it’s easy for someone to fall victim to seemingly legit scams.
- The performance fees may be a little bit on the high side.
How much can you earn on a managed forex account?
This question is naturally one of the most frequently asked, particularly for curious non-traders. Sadly, it has an unspecified answer as the possibilities are open-ended. Self-directed traders themselves cannot accurately determine how much profit they can make in a day, week, or month due to the uncertainty of forex.
Hence, it’s challenging to put a number on what you can earn on a managed account as it’s dependent on several factors. On one end, anything is possible in forex; 10%, 100%, 1000% gains are all theoretically possible. Yet, the important question is the risk taken, which separates the professional from the amateur.
Therefore, how much you can earn is purely performance-based and will vary widely according to the managers investors subscribe to.
Are managed forex accounts safe?
Scams of all sorts in currencies are quite prevalent, warranting the highest caution possible, especially for less-informed investors. Generally, the only managed forex accounts considered safe are those offered directly by established brokers.
One should certainly be wary of any so-called investment programs claiming to be introducing brokers. It’s common for these companies to claim they have partnerships with particular brokers.
One of the issues with this premise is clients have the impression their deposited funds go directly to said brokers, but it’s likelier they are instead funneled to the actual company.
Another tell-tale warning to ensure your safety is any programs with abnormally high minimum deposits, usually above $5000, and ‘guaranteed’ monthly returns. Generally, you’ll want to invest in managed account services directly from a strictly licensed broker; this method has far less risk.
The brokerage will be transparent in the different managers available and all the necessary performance metrics with this avenue. Best of all, clients have control over their funds and can decide when to withdraw at any time, barring any relevant penalties depending on the agreement.
The risks of managed forex accounts
There are essentially two risks to such services: falling victim to scams and the general risk of losing money. The first danger is the easiest to overcome as investors need to use only the most regulated brokers.
Plenty of scams exist of so-called PAMM investment services without any recognized regulation from a known regulator. The second danger relates to trusting your money to someone else.
Although investors will always view a trader’s performance beforehand, these results do not indicate what will happen in the future. How a manager generates trading ideas may not be transparent, and this dependence means investors cannot make their own informed choices.
These are points particularly pertinent for non-trading investors. Although you alleviate the hassles of making your own trading decisions, it’s still crucial to have an above-average understanding of the dynamics of forex, a crash course of sorts.
This baseline knowledge allows investors to pick the right manager based on their risk tolerance and expectations and avoid con artists.
Performance statistics to understand about forex managed accounts
All potential investors for managed accounts need to familiarise themselves with some crucial performance metrics to have the best chance of choosing the most profitable PAMM agent. We should first treat investing in managed accounts as a long-term endeavor.
Although many investors may naturally favor high short-term gains with large drawdowns, it’s better to play it safe, particularly if you’re new to the forex world. Below are some of the main statistics to access for any managed account and what they mean.
Account age
This refers to how long the managed account has been opened. Clients should only consider accounts older than one year for a more reliable track record, but the older, the better.
This longevity is a decent indication that a trader’s performance has not been a fluke and exemplifies their survival skills in different market conditions.
Drawdown
The drawdown measures the extent of a manager’s equity reduction from its peak to the lowest point as a percentage. For instance, if the balance of an account moved from $10 000 to $9 000, this would be a 10% drawdown.
Drawdown is one of the most critical risk management metrics as it alerts investors how much capital a manager may lose at any time. Of course, the lower, the better, generally not above 20%, and any figures above this mark should be treated as a red flag.
Profit factor
This statistic divides the gross profit by the gross loss. A profitable account always shows a profit factor of 1 or above. We may also consider the profit factor as the risk to reward.
For instance, if a manager’s profit factor is 2, it means they pocket twice the amount of money they risk on average, a commendable achievement. Hence, the higher, the better. If we couple this with a healthy drawdown, it would suggest a highly profitable manager with solid risk-to-reward management.
Of course, these are only some of the statistics to consider. Yet, they all relate to the risk side of things and are more crucial than the gains.
How to start trading with forex managed accounts?
Before you think of trading with forex managed accounts, you’ll want to spend a few weeks learning some basic educational material about the foreign exchange to understand the risks involved.
Another aspect to cover at this stage is the various performance metrics you’ll encounter when choosing a manager, like a drawdown, the different percentage gains, profit ratio, Sharpe ratio, etc.
Once the investor has acquired all this knowledge, they can do the following:
- Shop around for properly regulated, reputable brokers with fast deposits/withdrawals and the lowest overall trading costs.
- Once you’ve found the preferred broker, consider your growth expectations based on the amount of capital you wish to allocate
- The next step is looking at the performance stats of the various traders and choosing one aligning with your objectives
- Once you’ve chosen a fund manager, observe the performance/management fees, other relevant costs, and the limited power of attorney agreement before deciding to invest.
Managed Forex Accounts Summary
Managed accounts in forex are plentiful and act as a great opportunity regardless of whether you have trading knowledge or not. Such accounts can be a win-win for all those involved; managers, investors, and brokers.
One of the underlying threads is always using services from known regulated brokerages. Like any investment service, PAMMs possess risks of financial loss as there are no guarantees in forex. Hence, you should approach managed accounts with caution and ensure you’ve performed sufficient due diligence. Various account performance metrics that we’ve covered can help you to find a fund manager that can meet your investment objectives.
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