Education · Managed accounts
Managed forex accounts: how they work, what they cost and what to check
A plain guide to managed forex accounts: the main types, how fees usually work, what to check before you hand over trading decisions and the risks you keep.
What is a managed forex account?
A managed forex account is a trading account where someone other than the account owner places the trades. You fund the account. Who legally holds the money depends on the set-up, so check it before you deposit (see the table below). A manager, who is meant to follow an agreed strategy, decides when to buy and sell. You can usually watch the activity, but you do not make the trading decisions.
People choose managed accounts for different reasons. Some do not have time to watch markets. Some feel they lack the experience to trade well. Others want to see how an experienced trader works. None of these reasons removes the risk. A manager can lose money, and you carry that loss.
The word "managed" covers several different set-ups. They differ in who holds the money, how trades are shared between investors and how much control you keep. The next section compares the main types.
Managed account, PAMM, MAM or copy trading: what is the difference?
The four common models all let someone else drive the trading. They differ in how your money is held and how trades reach your account. In a discretionary managed account, a manager trades your own account. PAMM pools investors together. MAM links separate accounts. Copy trading mirrors a chosen trader's trades.
| Discretionary managed account | PAMM | MAM | Copy trading | |
|---|---|---|---|---|
| Where your money sits | Your own account, with a trading authority given to the manager | A shared pool run by the manager | Your own separate account, linked to the manager | Your own account |
| How trades reach you | Manager trades the account directly | Results are split by each investor's share of the pool | Master trades are allocated to each linked account by lot size, ratio or equity | Trades from the chosen trader are copied automatically |
| Who decides on each trade | The manager | The manager | The manager | The trader you follow, and you can stop copying |
| Typical set-up | One investor and one manager, agreed individually | Many investors, one manager | Many investors, one manager | Many followers, many traders |
| Fee terms | Agreed between the parties | Set by the manager and shown to investors | Can differ per account | Set by the platform or trader |
For a deeper look at the pooled model, read our guide to the PAMM account. Terms and features differ between providers, so confirm the details with whoever offers the product.
How do fees work on a managed account?
Fees vary by provider, so always read the terms. Most managed accounts use some mix of a management fee, a performance fee, or both. The manager is paid for running the strategy, and the way fees are set up changes how the manager behaves. Ask for every fee in writing before you fund the account.
Management fee
A management fee is charged on the amount of money managed, usually on a schedule such as monthly or yearly. It is paid whether the account gains or loses. It rewards the manager for running the account, not for results.
Performance fee
A performance fee is a share of the profit the manager makes for you. It is only charged when the account makes money. It can push a manager toward larger risks, because the manager shares in the upside but not in the loss.
High-water mark
A high-water mark is the highest value your account has reached. With one in place, the manager is paid a performance fee only on profit above that level. Suppose the account rises to a peak, falls, then partly recovers. Without a high-water mark, the manager could be paid again for the recovery. With one, no new fee is due until the account passes the old peak.
Also ask about spreads, commissions and swaps on the trades themselves. Trading costs reduce your return whether or not a manager fee applies.
What should you check before choosing a managed account?
Check who the manager is, whether their results can be verified, how and when you can withdraw, and who supervises the provider. Treat every claim as unverified until you can confirm it from an independent source.
- ✓ Who is the manager? Ask for their background and how long they have traded the strategy. Find out if they trade their own money in the same account.
- ✓ Is the track record verifiable? Screenshots are easy to edit. Look for statements from the platform or a third-party verification service, and read the period and account size behind the figures.
- ✓ What is the strategy and its risk? Ask about typical position size, use of leverage, stop-loss rules and the largest drawdown the manager has had.
- ✓ What are the withdrawal terms? Find out how often you can withdraw, any notice period or lock-up, and whether closing the account triggers a fee.
- ✓ Who holds the money? Ask where funds are held and who can access them. A manager should be able to trade the account but not withdraw your money to themselves.
- ✓ What is the provider's regulatory status? Ask which financial regulator, if any, supervises the provider, then confirm it on that regulator's own public register. Rules on client money and complaints depend on the answer.
We apply the same test to ourselves. AQ Markets Ltd. is not regulated by any financial services regulator and holds no licence. Our legal and regulatory status page explains this in full. Read it before you decide whether to deal with us.
What are the risks of a managed forex account?
You can lose some or all of the money in the account. The manager's decisions drive the result, and no manager can promise a return. Past results do not predict future results. Leverage can amplify losses, and with CFDs a loss can exceed the amount you deposited.
Loss of capital
Forex and CFD trading is leveraged. A run of losing trades, or one large loss, can erase a large part of your balance.
Manager risk
Skill varies and styles stop working. A manager can change strategy, take more risk than agreed, leave or make mistakes. A good past year says little about the next one.
No assured outcome
Nobody can promise a result. Be wary of any offer that states a fixed return or says losses cannot happen.
Fees reduce returns
Management and performance fees come out of your results. A strategy needs to earn enough to cover them.
Access and timing
Withdrawal terms may delay getting your money out, and a poorly timed exit can lock in a loss.
Concentration
A managed account puts your results in one person's hands. Using one manager or one strategy leaves you exposed to that single approach.
What managed options does AQ Markets offer?
AQ Markets offers the Opulence Managed Trading Account and Copy Trading. Each has its own page with the details. We do not quote performance or fee figures in this guide. Read the product pages and the Risk Disclosure, and ask us questions before you take any step.
Opulence Managed Trading Account
A managed trading account product from AQ Markets. See the Opulence page for how it is set up.
Copy Trading
Follow selected traders and have their trades copied to your account. See Copy Trading.
Money managers
If you are a manager looking to run client money, see Money Manager / PAMM.
Risk warning. Managed accounts do not remove trading risk, and no manager can promise a result. CFDs are leveraged and losses can exceed your deposit. This guide is education, not advice. Read our Risk Disclosure before trading.
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