Passive trading is a frequent choice among both beginners and experienced traders who want to save time, effort, and nerves. In this guide, we will describe the most common types of managed accounts and explain how they work, as well as provide tips on which platform to choose for such passive trading.
In short, a managed account is a type of trading profile, which is monitored and controlled by an advanced trader or financial advisor on the behalf of a client who has no time for active trading or lacks knowledge, skills, and experience so far. It is a kind of passive income.
In practice, this tactic can be realized via a vast variety of instruments:
- Copy trading. It implies subscribing to the notifications provided by another highly successful trader and mimicking his trades. One can either control his trades in manual mode choosing which deals to mimic or opt for full automation and earn absolutely passively.
- Percent Allocation Management Module (PAMM).This management system controls all the activities, like trades, earnings, or losses, based on the return and volume ratios and divides them into several portfolios.
- Multi-Account Manager profile (MAM). It is a choice of those traders that are ready to bear increased risks for the sake of higher profits. So, they give their managers access to several accounts and agree to assign different levels of leverage to each of them.
- Advisory service. Unlike the case of standard managed Forex accounts, you will be offered to meet with a trading advisor and discuss the strategies and instruments that will suit your needs the best. As a result, you will get an opportunity to influence the decisions taken by your personal manager and explain your aims and preferences.
- Managed portfolio. By contrast with managed accounts, such portfolios usually include other assets in addition to foreign currencies.
- Pooled accounts. Some managers offer their clients to unite their accounts. Then they can control the funds of several traders via one account. For clients, the key advantage is a lower minimum deposit ― $1000–2000. And, in the case of an individual managed account, that limit usually reaches $10,000.
Where to get a managed trading account? That depends on your approach. For example, if you want to try copy trading, we recommend you consider eToro, FXTM, or RoboForex, MAM profiles ― AvaTrade, FxPro, or TickMill, PAMMs ― Swissquote, InstaForex, or Forex4You. However, this list is not complete, there are also many other platforms worth your trust. Besides, if you are going to turn to a certain manager, you can freely ask him about which broker service he prefers to work with.
In sum, we must acknowledge that switching to a managed account is a much safer and more profitable choice in most cases, although there is always a certain risk of losses.