Investing in a forex MAM/PAMM can be a perfect solution for market enthusiasts who are unable to trade on their own. In fact, forex-managed account services open up a lot of opportunities for beginners as well as professional traders with expertise and experience. Those who are interested in making some passive income from the dynamic currency market can also invest and earn via MAM/PAMM account services. The first step to becoming an investor is joining a reliable platform offering managed account services.
After this, you can deposit funds and choose the account manager/top trader to manage your trades. All the trades they enter on their master account will be copied to your trading account in real-time, and that’s how managed account services work.
How to Choose the Best Trader as Your Mam/PAMM Account Manager?
The most important part of investing in a MAM/PAMM account is choosing your account manager, who will be a professional and experienced trader, managing the trading activities of many investors through their master accounts. For choosing the best trader as your MAM/PAMM account manager, you must ensure they possess some qualities essential for getting the best possible results in trading. So, we have made a list of the top qualities to look for while selecting your account manager.
1. Professional Experience: One quality that your MAM/PAMM account manager should have is professionalism. Because the very purpose of opting for managed account services is to leverage the knowledge and professional skills of an expert trader, the account manager you plan to trust for the trading process must have enough experience as a trader in the forex market. They should be professional and skilled enough to manage multiple accounts and should have a successful track record.
You need to look at their past performance as well as the trading results by checking the return on investment or profitability. If they have made their trade history public, you can carry out a brief assessment to determine the quality of their trades. You can use basic automated tools like trading calculators to assist you in this task, as calculations are essential to making a sound investment plan.
Also, make sure they are consistent and follow a systematic approach towards trading. A quick overview of their master account and profile can tell you a lot about their account management skills. I suggest you always look for the most experienced account managers as they are well-versed in the market situations, and you can always rely on them for a smooth trading process. In the meantime, you can also indulge in practical learning by opening a demo account on the MT4 or MT5 platform. It’s better to practise on MT4 since it is suitable for beginners and has all the tools to enhance your trading skills for the future.
2. Risk Management Skills: One factor that we can never avoid while engaging in forex trading is the market risk that comes from volatility. But this volatility is essential for making profits; hence, you must be ready to take some risk to earn as a trader. The risk will also apply to a forex MAM/PAMM account investor, but since the account manager will be in charge of all trading activities, you must look into their risk management skills before investing in their strategy.
Risk management is the ability to manage your risk in a way that losses are minimised when they happen. Risk management is also about maximising profits, as you can compensate for the losses with the extra profits earned. The best trader is not someone who makes the most profits but it is someone who limits their losses in all situations, which depends on their risk management skills.
Hence, you need to make sure the account manager is good at risk management. Besides this, you should find an account manager whose risk profile or risk tolerance matches yours because investing your funds with someone who has a high-risk appetite is not ideal if you have a low-risk tolerance. So, take your time to find the most compatible account manager before investing.
3. Transparency and Communication: The next quality you should look for while choosing a MAM/PAMM account manager is transparency and communication skills. Sometimes, account managers tend to be secretive about their trading activities, making it hard to assess their performance. This puts you in a risky position as an investor. Hence, you should always look for top traders who are transparent and truthful about how they trade and manage accounts.
How much they communicate with their investors is also important, as you may often have doubts and questions as an investor. You are trusting them with the management of your funds, and they should be willing to answer your queries and address your concerns as and when needed. So, always check if the master trader is interacting with their followers and investors before investing your funds with them.
4. Trading Style and Strategy: One of the most important aspects that you need to consider before investing with an account manager is their trading style and strategy. You need to ensure the trade positions they open match your trading goals and profit targets. The trading style and strategy the account manager follows are relevant for an investor as they directly affect the results they get at the end of the trading process.
The fast-moving forex market provides many opportunities to make profits, but one cannot tap into these opportunities unless they have a solid strategy in place. There are a lot of popular forex strategies top traders follow, and as an investor, you need to ensure the account manager’s strategy is good enough to meet your expectations for profit.
When you invest your funds with an account manager, you are actually investing in their strategy or trading system. They should also possess enough skills to execute this strategy with perfection, but having a well-defined strategy is the first and foremost requirement. If you are a beginner, you may not have much information about forex strategies, but you should gain some surface-level knowledge on the topic for choosing an apt account manager for investments.
5. Regulation and Compliance: Another thing you should look for while choosing an account manager is the platform through which they offer their services. You need to make sure the platform is safe and regulated before investing your hard-earned money. The platform provider or broker is responsible for connecting your account with the master trader/account manager’s account, and a reliable, technology-driven platform is a must for the smooth functioning of MAM/PAMM accounts.
So, choosing a regulated broker offering MAM/PAMM account services will make the account manager selection easy for you as they always have the best traders to choose from.
6. Fees and Performance Incentives: when you trade on your own, the trading cost will include various charges like spreads, commission and rollover fees for overnight trade positions. But when you opt for an account management service like a MAM/PAMM account, you also have to pay the service fee for account managers. Most brokers automatically deduct this fee from your account balance, but you must check how much it adds to the trading cost.
In most cases, the MAM/PAMM account managers operate on a profit-sharing basis where the profits/losses made with the pooled funds of various investors are shared among the master trader and investors. So, you also need to consider the fees charged by the account manager you are about to choose, along with the percentage of profit that will go to them.
7. Client References and Reviews: The last thing that you need to consider while selecting a Forex MAM/PAMM account manager is word of mouth. This is the feedback left by their clients or investors and any reviews on their performance and services. It is similar to how we look at the reviews while purchasing a product online.
Reviews help us compare different options and choose the best one. This works in forex MAM/PAMM account investing as well. So, you can go through the account manager’s profile and see what their followers/clients have to say. This also helps you set realistic expectations about the results you will get after investing in a strategy.
To sum up, investors must spend enough time researching before choosing their MAM/PAMM account manager. But completely relying on just one account manager will increase your risk, and diversification would be the best way to maximise your gains while minimising potential losses. Diversification is the key to making the most out of any type of investment, and this technique should be applied in the case of forex MAM/PAMM account investments as well.