If you are into Forex Market be a broker or trade, you must have heard about Forex Account Management. In this blog, we will discuss about all you need to know about forex account management like:

  • What is Forex Account Management?
  • How does Forex Account Management work?
  • What is PAMM?
  • What is MAM?
  • What is Forex Fund Management? etc

Forex Market is the largest Trading Market of the world which lets everyone with the smallest amount of funds to participate in the market. Forex Trading has opened the floodgates of money making opportunities for people from all over the world. 

Forex Account Management

PAMM, MAM

All a retail trader needs a computer device like smartphone, laptop, PC with internet connection and a Forex Broker that would connect them with the international Forex Market.

But as simple as it may seem to trade into forex and making money from it is not that simple and easy. A rough estimate suggests between 70-95% of retail traders lose money in Forex Trading. That’s a big number!

And mind you; forex trading is a zero-sum game where one trader’s loss is another trader’s profit and vice-versa.

It has 2 simple interpretations:

  • Most of Traders are Losing Money
  • Few Traders are making money that too in large sums

What should loss making traders do?

  • Stop Trading completely and leave the Forex Market 
  • Keep trading in hope that they would turn profitable some day and lose money all the way.
  • Team up with Profitable Traders who have honed the skills and patience to make profitable trades.

Third option looks to make sense, doesn’t it?

Most Retail Traders who lose money trading forex usually ask either of these questions?

  • Can someone trade forex for you?
  • Can I get someone to trade forex for me?

And the answer to both these questions is YES!

Yes, a forex trader can get someone to trade on behalf of you and make profits. The “someone” in this arrangement is called Forex Fund Manager who would trade for you.

Forex Account Management

Forex account management is the solution usually provided by Forex Brokers that let Fund Managers or Master Traders to manage funds of investor traders and trade for them. The Investor Traders get to make profits from expertise of Master Trader and the master trader earns service fee as well as piece of profit as per agreement.

Forex asset management, forex portfolio management and managed forex trading are some other terms used interchangeably for Forex Account Management only where funds are managed by a third party for fee and other charges.

In nutshell, Forex asset management, forex portfolio management, managed and Forex Account Management all mean the same thing: a professional individual or group managing funds for other individuals or institutions and making trades on their behalf for a pre agreed professional fee and/or share in profit made. 

What is a managed trading account?

A trader can sign up and open a regular trading account with a forex broker and do forex trading by him/herself. Such an account offered by a Forex Broker is called Forex Trading Account. 

There are usually 4-5 different options for Forex Trading Account offered by brokers depending on choice of instruments, charges, minimum deposit etc. 

A Managed Trading Account is a forex fund management account offered by several brokers. This account is usually managed by some fund manager  or master trader who manages the fund available in Managed Trading Account as per the terms and conditions. 

These conditions could include the proportion of funds to be invested, instruments, lot size, drawdown, etc.

A Managed Trading Account is a win-win for forex trader, broker and fund managers. They all get to help each other and make money. 

  • Forex Trader gets to avail services of an expert fund manager and increases the chances of making money.
  • Master Trader or Fund Manager gets to serve the fellow traders with his/her profit making skills in forex trading. In return they can charge professional fees and/or share in profits.
  • Forex Brokers get to offer Managed Trading Account, an attractive and in demand value added service to their clients. This helps them with additional revenue source by charging fee, increased volumes etc.

What is the difference between a managed account and a brokerage account?

When it comes to Forex Trading, there are few unique identifiable differences between a managed account and a brokerage account.

DifferenceManaged Trading AccountBrokerage Account
Trading MethodTrading is done by Fund Manager. Trading is done by the trader only.
ControlFund Manager gets the access to funds and trades etc.Traders have full control over the trades and funds.
ChargesCharges are usually higher by way of Fee & Commission.The usual Brokerage Charges.
Profit & LossProfits & Losses are largely in the hands of Fund Manager. Profits & Losses are largely in the hands of Trader only. 
WithdrawalFunds are usually blocked for a predefined time, say 3 monthsThere is no lock-in for the funds.

What is a Forex Account Manager?

A Forex Account Manager is an individual or group of professionals who trade on behalf of an investor for a fee and/or shares in profits made. These individuals or groups of people are usually skilled traders who have honed the skills of making profitable trades consistently.  

Social Media has given rise to influencers in every industry. These influencers usually have a large fan and dedicated fan following who are amazed at their skills and expertise in their field.  Forex Market too has seen huge popularity of traders who would show and teach how to make profitable trades. They are popularly called Pro-traders or Master Traders among the forex traders fraternity.

A pro trader or master trader too can become a Forex Account Manager for their followers who want him/her to trade on their behalf and make money for them.

Forex Account Management Software

The whole arrangement between a Forex Fund Manager and Traders is established and managed automatically with the help of Forex Account Management Software. The Forex Fund, Asset or Portfolio Management may seem very simple but it has different aspects which require different kind of software and tools.

MAM  & PAMM are the 2 most popular Forex Account Management Software

Available in Forex Market. They serve different purposes within the Forex Fund Management scheme of things. 

Lets understand how MAM & PAMM work and what purpose they serve best.

Forex MAM

MAM stands for Multi Account Manager in Forex Trading. MAM is a software that lets a fund manager to place trades on multiple accounts simultaneously. 

Think for a moment, if a fund manager is managing funds of different traders and placing trades on their behalf, can he place the same trade one by one to everyone’s account?

Try to visualize the scene, the master trader is placing orders one by one, he needs to login into multiple accounts, place same order and by the time he places order in 5 or 10th account, prices may have already moved and the trade may not look due to change in risk reward ratio. 

MAM Software addressed this issue in Forex Trading by allowing master trader;

  • to connect with multiple investor traders accounts
  • To login into their accounts
  • To remain logged in simultaneously
  • To set the criteria on which an account can be traded like lot size, proportional by equity, balance or available margin or lot multiplier.
  • By placing an order at one place and it getting placed in all connected individual accounts
  • To show summary of Profits and Losses to individuals based on the performance of trades

PAMM in Forex

PAMM stands for Percentage Allocation Management Module in Forex Trading. Forex PAMM Software is a Fund Management module that lets the funds of all the investors’ accounts to pool together with fund manager’s account which creates the master funds (fund of funds). 

Trades are taken by the fund manager considering the available master fund which is sum total of all the funds allocated by investors and fund managers fund. 

Profit and losses are distributed among the investors’ accounts in the percentage of their respective funds used in trading after deducting the professional fee, share in profit and any other charges after the term which is usually in weeks or months.

So if an investor had allocated USD 1000 to PAMM Account and 

  • the Fund Manager made trade worth USD 100,000
  • Investors percentage allocation stands at 10% in trade. 
  • If the profit on this trade is USD 1000, this investor’s profit in proportion to his fund is 10% which comes out to be USD 100
  • S/he would get the adjusted profit and losses along with fee and profit sharing deductions at the end of the term.

MAM Accounts  & PAMM Accounts 

MAM Accounts  & PAMM Accounts are the Forex Fund Management accounts offered by many popular and established Forex Brokers wherein funds of investors are managed by brokers own fund managers or third party fund management companies and service providers. 

What are managed forex trading services or forex wealth and portfolio management services?

While this a common understanding among the Forex Traders that MAM Accounts & PAMM Accounts are offered by select Forex Brokers only but there are businesses, institutions and companies that provide forex account management services or forex fund management service.

There are many reputed forex fund management companies that are dedicate to providing managed forex trading services and forex wealth and portfolio management services to individual investors and institutions who want to participate in forex trading and make money.

How does a forex fund management company operate?

  • Their main business is Forex Fund Management Service
  • They have a dedicated team of skilled fund managers skilled to take profit making trades 
  • They have advanced research and analysis mechanism in place to make informed trading decision
  • They have advanced money management and risk management tools in place to ensure “consistent” profits over both long and short terms.
  • They may team up with a Forex Broker. It helps them to get traders to avail forex fund management service and on the other hand place the orders via broker. This is a win-win arrangement for everyone like forex brokers, traders and forex wealth and portfolio management services providers.

Managed Forex Accounts Low Minimum

That’s the most common question asked by investors or retail traders who want someone else to trade for them and learn about Managed Forex Accounts like MAM Account & PAMM Account offered by Forex Brokers.

Here are the 2 most popular Managed Forex Accounts Low Minimum:

1. Managed forex accounts $1000 minimum 

$ 1000 is the most popular and common Managed Forex Accounts Low Minimum demanded by most Forex Brokers & forex wealth and portfolio management services providers.

Why $ 1000 minimum?

  • Well it’s a decent size of fund that gives forex fund managers enough capital in hand to make trades. 
  • A leverage of 1:100 would make capital of $ 100,000 and 1:1000 leverage gives $1,000,000. That’s some serious money.
  • Larger the capital more the possibility for investors, brokers and fund managers to make money.
  • Last but not the least is just marketing tactics. An investment of $ 1000 has been used in many examples while educating beginners how it could grow if they trade into forex. That’s the number that has stuck in traders minds.

2. Managed forex accounts $100 minimum

As the $ 1000 is minimum demanded by Forex Brokers & Forex Asset Management Companies, Managed forex accounts with $100 minimum is the most demanded account by Forex Traders. 

Why $ 100 minimum?

Managed forex accounts with $100 minimum are for those skeptic traders who are not too sure about the forex management and just want to try it out first and see if it really works as advertised.  

It doesn’t give much in the hands of fund managers yet they pool these small managed fund accounts with them so that these small traders could show what a large account could do for them.

These Managed forex accounts with $100 minimum are not much profitable but forex brokers and fund management companies still offer them in hope that some of these investors would deposit large sums going forward. This will help everyone to make decent money out of the Forex Fund Management system.  

How do Fund Management Accounts like MAM, PAMM work?

Here is a simple step-by-step explanation of How do Fund Management Accounts like MAM, PAMM work:
How do Fund Management Accounts like MAM, PAMM work?

Total Time: 30 days

Step I

A Trader decides to become Investor and chooses which Fund Management Accounts like MAM or PAMM suits him best.

Step II

S/he signs up for the selected Fund Management Account as an Investor or client.

Step III

Signs the agreement to give access to his/her account to Fund Manager with LPOA (Limited Power of Attorney). Limited Power of Attorney (LPOA) is legal authorization for a forex fund manager to perform specific functions on behalf of an investor in that investor’s account.

Step IV

Allocates the fund to MAM or PAMM Fund Management Account

Step V

Sets the limits and conditions of trades and fund allocations.

Step VI

Fund Manager or Mater Trader makes the trades to best of his/her abilities over the pre decided duration.

Step VII

After the pre-decided duration, Profit & Losses are distributed after deducting fee and profit shares.  

Step VIII

The Investor can review the performance and choose to continue or stop Fund Management Services. S/he may switch the Fund Manager as well if there are more than one.

Hope this Definitive Guide on Forex Account Management brought greater clarity on the subject. If you are planning to start a forex brokerage or already running a brokerage, this information will be crucial.

Please feel to contact us for any more clarification.

We will be happy to help!

Leave a Reply