Forex trading can be divided into active and passive. In the first case, the trader himself actively opens and closes positions, in the second case, someone does it for him, actually managing his money. The main popular areas of passive trading include: trust management of Forex, PAMM Forex accounts and signals online Forex. What is the fundamental difference between them and which of them is better, we will look further.
PAMM, trust management or signals in Forex: what to choose?
Trust Management Forex provides for the conclusion of a contract with the management company and the transfer of money to it for a certain period of time with the payment of a part of the earned profit.
- The presence of the office and the actual existence of the management company inspires confidence. The risk of fraud is minimal;
- a company can distribute investor money across different portfolios, diversifying risks;
- You can verify the company’s performance over a long period of time.
- a trader often does not know where his money is being invested;
- the need to conclude a real contract (time costs);
- in most cases, the contract is for a fixed period of time without the possibility of early withdrawal.
A PAMM Forex account is an analogue of trust management, which is distinguished by the fact that you can invest in individual managers. Each manager can have accounts with different brokers and implement radically opposite strategies. An example of the most famous PAMM site is ZuluTrade.
- there is the possibility of a detailed analysis of the trading history of the manager;
- time saving and risk diversification. You can invest simultaneously in any number of managers without leaving your home;
- cooperation with the manager can be stopped at any time almost instantly without any sanctions;
- manager’s remuneration -% of profit.
- the need to open your own trading account. In addition to analyzing the manager, you need to choose the broker himself;
- The rating of managers is often not checked. For the most part lucrative accounts – bots, martingale strategies and trading on a demo. Difficult to choose a reliable manager;
- in fact, a manager controls the trader’s money, who is not responsible for them.
Forex signals online is information to an investor from an experienced trader about the need to open a position. They can be semi-automatic (they come to the investor, the investor himself makes the decision to open a position).
- The response rate for automatic signals is a few milliseconds;
- money remains at the disposal of the trader. He decides to open a position;
- risk diversification. The number of signal providers is unlimited.
- trading conditions (deposit, leverage, broker) of the investor and the trader must be the same;
- fixed monthly fee for any trading result;
- risks in relation to the supplier are the same as for PAMM accounts.
Conclusion. There is no perfect tool, but each of them can be effective in a certain situation. What would you choose? Write your comments after the article!