Many investors want to exploit the income potential of the forex market but they lack adequate information on how to go about it. Fortunately, some entities and professionals offer forex account management services to such traders. Through managed accounts, investors get an opportunity to diversify their investment portfolios.
Explaining forex managed accounts
Professional money managers bring together a group of investors to help them earn from the forex market. What happens is that the investors pool funds and entrust the professional to make trading decisions. Particularly, such accounts that professionals monitor and operate are what traders call managed accounts. Notably, the account owners do not participate in decision-making but they have exclusive access to the funds in the account.
Managed accounts are unique in that the parties have to sign a management agreement. This document lays down the rules that govern the relationship between the account manager and the account owner. Also, the document specifies the compensation model of the professional money manager. Therefore, managed accounts benefit from a disciplined investment approach as well as unceasing attention.
Types of forex managed accounts
Interestingly, forex managed accounts are similar to mutual funds in concept but they operate quite differently. Further, the forex managed accounts come in three different types. In the first place, there are individual forex managed accounts. When you talk about forex managed accounts, the individual account is the standard type. In this case, the owner of the account is an individual and the account manager makes trade decisions based on your risk appetite. Usually, professional account managers demand huge deposits of funds before they can start trading.
Secondly, there is the pooled forex managed account. Similar to mutual funds, this account brings together many investors who have common investment objectives. In this case, the investors put together funds that then buy certain assets. In addition, the investors share all liabilities, expenses and management fees. The minimum deposit for such accounts could be as low as $100.
Thirdly, there are PAMM and MAMM accounts that offer more flexibility to the investors in terms of trading. The Percentage Allocation Money Management (PAMM) account operates like a quasi-investment fund. Here, a money manager monitors and operates multiple managed accounts under one roof. The manager then shares the profits in terms of percentages across all the managed accounts. On the other hand, the Multi-Account Money Manager (MAMM) account operates just like the PAMM account but affords more flexibility to the manager in terms of trade allocation.
How forex managed accounts work
First, an investor must open a managed account with a broker of their choice. Notably, many reputable forex brokerage firms offer forex account management services. The investor will then fund the account and then sign the management agreement (otherwise called the Limited Power of Attorney Agreement (LPOA)). Specifically, the agreement allows the manager to enter and exit trade positions but without touching the funds.
The LPOA allows the investor to check the account balance, to make withdrawals and even to deposit more funds. Besides, the investors can monitor the progress of trades but without tinkering with the strategy. For pooled accounts and PAMM and MAMM accounts, there is special software that facilitates the investor-manager interaction.
Best forex account management services with a verifiable record of accomplishment
The market is teeming with forex account management service providers. Similar to providers of forex expert advisors, there is a possibility of many bogus players. As such, it is imperative that you distinguish the legit providers from the swindlers.
Here are some of our best picks.
CORAL Forex stands on three strong legs insofar as its services are concerned. Firstly, the service provider is big on safety. All parties have to sign an LPOA before the commencement of any activity. Secondly, the account managers use robust investment strategies that use the best forex indicators in the market. In addition, the professional account managers deploy powerful FX expert advisors to search for trade signals. Thirdly, CORAL Forex works with the market’s best forex brokers to ensure that you get the promised return within the specified time.
PLUTUSX operates more like a wealth management company. The company offers MAMM accounts through which it distributes your capital to avoid the dangers of both systematic and unsystematic risks. Notably, traders have full control of their accounts and they have the power to influence the prevailing investment strategy. Further, the company has web terminals and mobile apps to make sure you can access the account on the go.
Based in Mauritius, Alpari is among the biggest players in the global forex market. Further, reputable institutions like the International Financial Services Commission of Belize and CySEC regulate the company. The company offers PAMM accounts that target a range of investors across the risk spectrum. Its professional account managers use powerful forex charting tools and Forex EA to guarantee good returns.
The Cyprus-based firm has clients worldwide. Notably, FXTM enjoys regulation by the UK’s FCA, Cyprus’ CySEC, and Belize’s IFSC. Besides standard managed accounts, FXTM offers PAMM and MAMM accounts. Further, the company provides MetaTrader platforms through which investors can follow the trading activity of their accounts.