What Is a Managed Account?

A managed account is a fully segregated brokerage account, individually owned by an investor but managed by a professional money manager on the investor’s behalf. Money managers can access the account only to open, modify, or close trading positions. Managed accounts offer everyday investors the opportunity to have their funds managed by professionals while maintaining full control over their capital, along with high levels of safety and transparency.

Major Types of Managed Accounts

Money managers trade across investor accounts via a large master account. This structure typically follows one of four models: PAMM, MAM, LAMM, or Pooled Accounts.

(i) PAMM (Percent Allocation Management Module)

PAMM accounts allow investors to allocate a percentage of their capital to mirror a master account. Gains, losses, and fees are distributed equally by percentage, regardless of account size. Investors can follow multiple money managers in a single account. Minimum deposits typically start at $500.

(ii) LAMM (Lot Allocation Management Module)

LAMM accounts enable money managers to allocate different trade sizes (lots) and apply distinct leverage levels for each investor. This model is designed to reduce the risk for large investors by avoiding excess capital exposure in a single account.

(iii) MAM (Multi-Account Manager)

MAM accounts combine features of both PAMM and LAMM, offering greater flexibility. Investors can set custom parameters for order execution and even modify MAM trades independently. Minimum deposits typically start at $500.

(iv) Pooled Accounts

In pooled accounts, multiple investors combine their capital into a single fund and share profits, losses, and fees. The minimum deposit is usually around $2,000. Withdrawals are restricted for a minimum period and may incur penalties for early access.

Chart: Regulated Forex brokers & PAMM/MAM accounts

How Managed Accounts Work (Step-by-Step)

1. The investor selects a reputable money manager.

2. The investor reviews and agrees to the manager’s fee structure (typically based on performance).

3. The investor opens an account with a supported brokerage firm (most managers work with multiple brokers).

4. Both parties sign an LPOA (Limited Power of Attorney) agreement, authorizing the manager to trade but not withdraw funds.

5. The investor funds the account (only the investor can deposit or withdraw funds).

6. The money manager begins trading; compensation is earned based solely on performance.

7. The investor can monitor account activity at any time and revoke the LPOA agreement whenever desired.

Key Advantages of a Managed Account

• Professional fund management

• Full risk control and customization of risk exposure

• Maximum liquidity (withdraw funds anytime, except in pooled accounts)

• Transparent performance tracking

• Capital safety (managers can only trade, not withdraw)

• 24/7 account access (view balances, trading history, etc.)

• Time-saving—no daily trading decisions required

• Suitable for professionals, non-professionals, and beginners

Choosing Among Forex Account Managers

Key criteria when selecting a money manager:

• Supports your preferred broker (ensure fund safety and convenient deposit/withdrawal methods)

• Provides full system transparency and detailed reports

• Demonstrates consistent profitability (at least two years of verified results)

• Maintains a low maximum drawdown (the largest drop from a peak to a trough before recovery)

• Has a high Calmar Ratio over the past three years (compares average annual return to maximum drawdown)

■ Managed Forex Accounts

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