Top 5 Forex managed accounts
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Forex Broker of the Year 2012 and 7 other awards, many successful traders
Award winning, high reputation, low spreads, best PAMM-Software
Many successful traders
Many successful traders
Many successful traders
Minimum spread on EUR/USD
0.5 pips
from 1 pips
3 pips
2 pips
3 pips
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Australia, Estonia, EU-regulated
RAFMM (Russia)
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RAFMM (Russia)
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Investing in Forex Managed Account
People across the world are choosing to invest in the forex market as it provides ample opportunity to make profit and hence is drawing a lot of investments. The daily turnover of the market is about 3.2 billion which in itself is a proof of the popularity of the market and also makes it one of the largest financial markets of the world. In forex trading the way in which you foray into the market is via brokers. If you would like to get into forex trading then the first step in the same would be to select the broker and open an account with them. Other than the cash the forex trading will require you to invest much of your time as well as effort. If you want to reduce the amount of time and effort required for trading in forex, you can look for managed accounts offered by many forex brokers. However, it is advised not to invest the money that you cannot afford.
Forex managed account is an account offered by almost all the brokers in the market that you can open at any time. Once you have opened the account you will be given an assigned professional trader who will do the trade from your money. This is an excellent method of grabbing the opportunities available in the forex market without having to spend time in the market. It is especially best for those investors who do not have time for trading. This is also a good opportunity for all the investors who have enough money in the account and want to invest it in the best investment firm.
If you want to invest some of your money in the forex market and at the same time you are new to the trading world, opening and closing an account can be a tough decision to make. This may cost you your money as well as time. The cost of making an error in the forex market is very high and it is very much possible if you do not have very good knowledge of the forex market or do not have guidance from an expert for the same. However, there are many benefits of opening a managed account with your broker and some of them are:
The safety of your investment and account is very high as it is being managed by a professional.
Since the money in your account is invested and managed by a professional the chances of making profit is very high.
In managed account you have the facility to diversify your investment as much as possible so that the risk is not centered and cause heavy losses.
No risk no gain and it apply to managed accounts as well. Since the risk in case of managed account is high even the returns is very high.
With managed accounts you have the facility of grabbing the trading opportunities in case of rising as well as falling market.
The liquidity with forex managed account is very high which means that the investor has all the right to liquidate the asset or withdraw the money invested at any time.
No opportunity of making a profit will be lost while you are sleeping
Some of the brokers provide their investors with custom-made report of the technical analysis
The leverage offered for managed account is comparatively higher
Depositors or the investors who want to earn revenues on their savings will find the forex managed accounts a very good means of acquiring profits as the revenues are very high due to the compounding effects on those revenues. For senior citizens this investment can be a great as the finances in this can be withdrawn by the investor at any time and also as monthly cash flow. The reviews for managed account says that it is also a protected account since it is certified by the regulatory authorities and often inspected vigilantly and above all the investors have full control over their money. The traders only have the authority to look after the capital of the investor.
The foreign exchange managed account has all the possibility of earning huge profits for their investors. However, while striving to gain large profits the team management of forex trading makes sure that the investor’s money is safe. Many of the brokers have made sure that there is maximum drawdown limit so that the deficit is restricted to a certain amount. The trader is given a limited power of attorney to handle the investors account to place the positions; he does not have the authority to withdraw the money other than his share. The brokers or the management firms for currency exchange earn revenue by charging their customers a part of their profit which ranges from 25 to 50%. However, one should not deter them from choosing a good broker even though the charges are high; this is because they garner for you more revenues when compared to those with lesser charge.
The online trading service has enabled the trading to happen from anywhere on the globe and is not centralized. Hence one can trade forex 24 hours a day. In case of fixed income and equity investments their performance is affected by the performance of the same in other countries. Thus, even if the equity and fixed investments are are globally dispersed, they lack full diversification. However, in case of forex trading the managed account especially gives the investors access to the forex market which is way beyond the fixed income and equity. Hence it is more completely diversified and the risk in the portfolio is also reduced. Investing in forex trading can earn traders a yearly interest of 17% to 230% and looking at the returns that there is no need to say that an investment of such type is very rare to find, just like finding teeth in hen’s mouth. Most of these forex investments are transparent and secure. Most of these companies charge fees only if the client makes profit and if no profit is made the charges are nil. The best thing about managed accounts provided by most of the forex brokerage company is that you can open an account with them by investing as low as $50. The investor has full control of their account and the profit in the account cannot be withdrawn by anyone other than you. If you are going for a managed account your account will be managed by a professional trader and the control of the account will be in your hands. Though you do not require to have knowledge of the forex market, it is recommended that you get some know about the forex market and have all the details from the investor point of view and make sure that you get maximum from your investment.
While looking for a brokerage company for opening a managed account, one of the most important aspects to that you should know is, how the company handles the losses as it is the most inevitable part of forex trading. Some of the companies compensate the losses made in the managed account by the profit made by the company from your investment some time earlier. This offer is very lucrative and you should see that the broker you choose provides this facility.
The leverage with managed forex trading is very high and is also much higher than that of the stock market trading. This allows the trader to hold large positions even with a smaller investment amount. But one should keep in mind that a high leverage can cause huge losses or even gains if there is no proper risk management. With managed forex trading account it is possible for the middle class to make a fortune with limited resource and is a great alternative investment.
In case of forex managers other than fixed income and equity managers, employs in both short as well as long positions with facilities which are equal to them. One of the biggest advantages of forex trading is that there is no difference in the profit potential or the loss potential between the short or long positions and due to this the forex portfolio is not very much biased for long and hence able to profit under any market condition. If you invest in managed account the manager of your account incorporates in the trade a disciplined risk so that the risk is limited and the growth of the investors account is smooth and adds to the values of the account. Leverage is one of the most useful and acceptable tool for forex trading which when used judiciously and with techniques of strict management. Therefor a high rate of interest is achieved for all the investors who invest in forex trading with a risk control of a level and which is not at all possible with any of the buy and hold investments.
The returns on the FX trading correlation with the bond or equity were very low. In between 1980-2006 the correlation was 5% with the equities while with the bonds it was -21% whereas the bonds and equities for the same period had a correlation of 26%.Low correlation with bonds and equities allow you to have good returns on your investments.
Comparing Forex with Stock, Indexes
Sl. No.
Forex
Indexes
Mutual Funds
1
It is the largest financial market of the world and daily turnover is $4 trillion/day
It is second only to forex market with daily trade of $100 billion.
2
The liquidity is high and trades what Wall St trades in one month
Liquidity is less
Liquidity is very low as it is a long term investment.
3
Forex trading can happen any time and on any 5 days of the week. Forex market is is moving always and the traders around the world are active all the time trading currencies.
The stock trading is time bound and can be traded during the day hours and for 5 days.
Trading is done acording to closing NAV.
4
The minimum leverage on the forex trading is 1:50 and some brokerage firms have also given a leverage of 1:3000. With a leverage of 2:1, with $1000 you can buy shares worth $2000 but with 1:50 leverage you can have control for $50,000 currency for just $1000
The minimum leverage on stock trading is 2:1 and can reach a leverage of about 100:1 at the most generally.
Most of the investments have a minimum amount that need to be invested.
5
Spot currency trading allows you to bypass any middleman doing the job for you.
Middleman is mostly must for trading stocks
Middleman or agents do the work of selling mutual funds.
6
Forex trading is a short time investment
Stock trading is a long term investment and is called blue chip stocks and to the value of the stocks become more with time.
Trading in Mutual fund is a long term investment with a locking period.
7
The operating expenses are very low.
The operating expense is more
Operating expenses vary based on the type of mutual fund bought.
8
It is very much tax efficient
This is has tax less tax efficient than forex.
It is comparatively less tax efficient
9
There is no sales load in the case of forex trading
The sales load is comparatively less
There may be a load of making sales.
Managed accounts of forex or any exchange traded funds are very much similar to mutual funds because both of them involve securities and offer their investors, diversified portfolios. However, both of them have a remarkable difference between them. Forex exchange like stocks is traded all through the day while the mutual fund is traded at the end of the day when the net asset value or the NAV for the day is settled. There is no minimum limit of investment or sales load with the forex exchange whereas for traditional mutual funds both of them apply. However, mutual fund schemes which are indexed do not have sales load.
In case of ETF or exchange traded funds the shares are created and redeemed which are mostly in –kind transactions and hence are not considered as sales. So, there are no taxable events which are created. Redemption does not create any tax event in case of ETFs but it does so in case of mutual funds. However, if there happens to be a forced sale of the stocks, mutual funds distribute and record more capital gains than the ETFs. The ETFs due to their structure which enable them to decrease or avoid the capital gains distribution substantially are more tax efficient and hence, the overall rate of return is affected substantially even if the mutual fund and ETF tracks for the same index.
Forex and stock investments are equally popular among the investors. Still there are a few differences between them. Stocks has been a popular investment for many from hundreds of years and the largest stock of the world NYSE or New York Stock Exchange has a trade of about $74 billion per day and has about 4500 stocks as listed. Forex on the other hand is the largest financial market which has $4 trillion of volume traded each day. However, in this case the traders mostly trade the four major currencies though there are dozens of other currencies which can be traded.
Now, the question is which is more alluring, a $74 billion turnover or $4 trillion turnover per day? Which helps make better choice, thousands of stocks or only dozens of currencies? Well, the answer is obvious, and this is the reason of forex exchange being more advantageous than stock trading. Thus we see that forex exchange has a larger market and the choices to make are easier. Trading in forex market can be started for $250 whereas to trade in stocks you need minimum of $2000. In case of stocks with your money you can control the shares of equal value whereas in forex exchange you can control currencies of higher value than the principal amount. Forex allows you to trade 24 hours a day whereas stock trading happens only during the day. It is easier to analyze the trend in forex market than in the stock market as a country would work steadily than the company. Forex exchange is an investment in the country whereas for stocks it is in the company. So, by all means trading is forex is more profitable.
Better trade on your own?
On our partner site www.forex-blogger.de you can find a forex brokers comparison and many videos and ebooks.
PAMM / MAC FAQ
What does PAMM exactly mean?
PAMM stands for Percentage Allocation Management Module.
Its a service that allows traders to manage the money of several investors on one trading account.
Who is interested in PAMM?
PAMM is interesting for investors who have no experience with the independent trading on the FX / CFD market, but would still like to make money on these markets.
And of course for successful traders.
How much return can I expect?
Between 5% and 20% return per year is realistic.
Above 20% is also possible, but a higher return also increases the risk accordingly.
We can not stress enough that losses are possible.
What kind of account do I have to open?
If you want to invest money in this kind of account, you usually have to create a “standard-account” and then open a “investor-account”.
For example, Admiral Markets calls this account “MAC”.
What are the risks?
Of course, there is a risk to lose money, but since the “manager” only makes money if profits are made, he also has a very large interest in generating profits.
Isn’t my “manager” able to just disapear with my money?
The manager has no way to withdraw money from the PAMM Account investors.
All deposits and withdrawals of investment funds, can only be done by the investors.
How much should I invest in a managed account?
Especially as a beginner you should first invest a small amount and see how the investment develops. If you are a beginner you should not be guided by the “greed” once the first a gain is recognized.
How can I minimize the risk?
By deversifying your money to various PAMM accounts. This way you can put your money in the hands of many asset managers.
Choose a low lever. Even for a managed account, you can often determine the lever individually.
For conservative traders:
There are traders who only hold very secure positions and trade very conservatively. Gains of 5-15% per year are still possible.
What should I consider when choosing the manager?
- How long does the manager have the PAMM account?
- How many successful trades?
- What is the profit percentage?
- What percentage of your profit do you have to share with the manager?
The amount that is shared with the manager varies from between 0% and 50%. If a manager only charges 0% of the profits, you should be very skeptical, because then the trader has no motivation to generate profits for other people.
Percentages above 40% are too high. However there are exceptions, there is a trader at Admiral Markets for example who made 70% profit through 143 trades.
40% of the profits you have to submit to this trader. At such high results this is a realistic number.
If losses occur, the investor and manager share these too. This is very fair.
Trader recommendations?
We do not make recommendations, and neither will your broker. The selection of a traders happens 100% at your own risk.
Should I deversify my money on different investor accounts of different brokers?
That is a good idea. For example you can put amounts between 500 and 5000 euros into various accounts at different brokers, and invest it in traders with a good past performance.
After a few months you could test to cash out the money to your bank account and then plan the next steps.
How do I compare forex investments (managed accounts) to investments such as fixed-term or overnight?
Investments such as overnight money / fixed-term money are absolutely safe investments because the deposits are covered by deposit insurance funds and various security systems of banks. You can’t compare these investments to any high-risk forex investments.
On the other hand, the low interest rate policy of the ECB will increase the number of people who no longer want to recieve 0.5 percent to 1.5 percent secure interest.
Why are there so few asset managers at Admiral Markets?
Admiral Markets is EU-licensed (MiFID (Markets in Financial Instruments Directive) in the EU managed accounts are treated as “asset management” and need to be licenced.
Admiral.MAC is short for “Multi Account Copier”, a concept to maximize profits by “copying” the trades of successful traders. This is done by setting these accounts up as a master accounts. Investors are hereby the “slaves”. These successful traders act as a “signal provider” and receive a performance fee.
This is Admiral Markets approach to offer a kind of “asset management” and still match all MiFID regulations.
This gives investors more security compared to totally unregulated entities like Instaforex or Alpari.
Admiral.MAC managers is for managers and for investors: Admiral.MAC-Invest.
Insta Forex and Alpari have no European license and therefore do not need to match with the relevant laws. For this reason there are a lot more active asset managers at these brokers.
Who are the successful forex traders and why they do they allow others to “copy”?
Often there are traders from Russia, Asia and countries where people are not as rich as in the Western world.
Nevertheless, they are talented traders who like to have a commission for their services, of course.
Important tips from us:
- Pay attentione to how many successful trades a trader did. It does not help when 70% profit was made, but this happened only through 3 lucky trades. There must be a continuity!
- Diversify between different traders, don’t put all your eggs in one basket.
- Profits from the past do not indicate future gains. It is incredibly important to remember this.
I still have questions, is there support service?
All three brokers offer free support for their traders.
Admiral Markets:
After registration at Admiral Markets you can open a MAC. Investor account.
Then you have the option to “follow” traders and copy their signal 1:1.
You can see demo accounts and real accounts.
As an investor you should follow a real trading account and not a demo one.
Alpari-Forex.com
The website of http://alpari-forex.com/ is only available in English or Russian.
Alpari has existed since 2004 and has its headquarters in London.
Alpari has a high reputation and is, for example, the jersey sponsor of West Ham United.
Alpari-forex.com is a distinct entity and regulated in New Zealand.
Through other entities like www.alpari.de you can’t invest in PAMM accounts.
Alpari won the Forex Broker of the Year 2012 – UK FX Award.
Here you can see a whole series of successful traders.
You can see when the trader has opened the account and how much profit the trader gained after 3 months, 6 months or daily.
It is very important that past gains (eg, 50%, 100% or 200) can’t promise any future profits for sure.
It is important to diversify your investments and not to put everything on one single trader.
Instaforex:
Instaforex is a Russian forex broker based in Russia (Kaliningrad).
In the screenshot you can see many successful traders with good performance.
You can see in detail (screenshot 2, monitoring of account 5151927 Profit FX 2013) how much profit was made through each trade during each period of time and when losses occurred.
Also you can see what fees are required and how many “active investors” each trader has.
FxOpenThe following screenshot shows PAMM section at FxOpen, also one of the best brokers, if you are interested in investing money easily.
LiteForexThis broker has a lot of PAMM traders too. They also offer a helpful tool for calculating your possible future gains, basend on the past performance of PAMM trader. Although you can never be sure about the perfomance in the future.
Risk Warning:
Forex and CFD trading on margin are very high risk investments and not suitable for all investors! High profits are possible, but also very high losses. Please only risk money you can afford to lose!