A managed account or PAMM is a form of investment very common in Forex trading. Since this feature is only getting to binary options industry, a lot of traders ask whether it is possible to make money by investing in binary options PAMM.
Before answering this question, we would like first to remind you the concept of the managed account. In most simple terms, the managed account refers to an account that belongs to a particular investor, but is looked after or “managed” by entrusted expert money manager. This expert money manager is supposed to come from a brokerage firm that specializes in a certain type of trading, which is binary options in our case. The experts of the broker’s firm you signing up an agreement with are obliged to achieve the best profits for their clients.
Right now there are not so many companies offering managed account feature, though this number is increasing day by day. So how basically to choose an options broker that offers this service on a high-quality level? In our opinion, it is better to start with the binary options managed account trial if such one exists. The free trial allows you to log in and observe how the account is traded by an expert in real-time. The account manager is trading with the firm’s money, so you do not deposit anything beforehand. If you like the performance, you can then decide to sign up an agreement on the managed account.
We highly recommend you to read the agreement carefully, as there are terms that you should keep your eye on. To give an example, binary brokers that offer PAMM account can ask you to accept the withdrawal restriction period. This means that you will not be able to withdraw any funds from your binary options managed account prior to the end of this period. The logic behind this restriction is simple – to make more profits for you. However, you can always negotiate about the withdrawal restriction with the brokerage firm.
Managed account: How does it work?
Can you make money with binary options managed account? Yes, you certainly can. However, it still might be a bit unclear how exactly your account is managed by a professional, so let’s clarify this.
First of all, you must be registered at the broker to receive an access to your managed trading account. Once you meet the deposit requirement for your account, the expert trader is assigned to you. His duty is to place a certain number of trades each day. This number usually depends on the type of the managed account you have previously chosen. Most of the time, the broker allows you to have an inside view on your managed account in order to view stats such as the trading amount, win ratio, maximum loss and so on.
Managed accounts for binary options usually offer high guaranteed rewards. In fact, the expected profits differ depending on the amount of your deposit. Hence, the more you deposit the more you can potentially get in the end. It is vital to note that you have to pay a regular management fee to your binary broker, either monthly or at the time of the withdrawal. The amount that the broker will charge you is stated in the agreement as well.
Now we would like to draw your attention to the pros and cons of using a managed binary options trading account.
The benefits of binary managed accounts
Perhaps the first reason why investors choose binary options PAMM accounts is that they may lack experience. Needless to say that success in binary options depends a lot on your actual involvement in trading financial markets and your background as a trader. This is why choosing a professional binary options account manager that trades for you is a bright idea. As the result, you will not have to worry about your positions because you can make money even while sleeping.
In addition, some people cannot do trading full-time as they have jobs or duties to perform. If that is the case, managed accounts can come extremely handy. For account managers executing trades is almost a daily routine. These binary traders are ready to commit a lot of their time to help you achieve your financial goal. Additionally, good managed account providers make sure you receive daily emails reports to demonstrate the contribution of the assigned manager to your account.
The managed binary options account also helps investors eliminate the emotion factor, which frequently ruins successful trading. Managers that look after your account are experts, as we have mentioned at the beginning. Thus, they are expected to be less affected by emotions than the others. They purely stick to their trading plan to generate great profits.
These advantages describe the best scenario, where you find a reputable brokerage firm full of professionals. However, things may go absolutely different way and we are going to discuss this right now.
The disadvantages of using options managed accounts
Frankly speaking, managed accounts in binary options is still a bit controversial topic among traders. Therefore, you can easily find different arguments about the downsides of using managed accounts.
An obvious pitfall of the managed accounts is that you never know whom you entrust your capital. Of course, you anticipate that this person knows what he is doing, but what if not? There are some binary options managed accounts providers that promise you the moon, but in fact can just use your money for their needs or even worse – their account manager wipes out your whole account and leave you with nothing. Reliable brokers always provide sufficient information about their account managers with officially released past records of trading activity.
Another common danger associated with managed accounts is that the broker might not let you withdraw your profits. Even though if your account is operated showing good stats, this can be an unpleasant surprise in the end. To prevent this from happening, we advise you to study attentively your potential partners by reading testimonials and various reviews. Your extra background check can definitely alleviate the risks of picking a wrongly managed account.
Despite the fact that binary options managed account can bring high returns, this type of investment in options can be quite risky. Your profit entirely depends on the skills of your manager and his risk/money management strategy.
Lastly, managed accounts have pretty high investment barriers. The amount of funds needed to open a good binary options PAMM account can even exceed $5000. On top of that, you have to pay extra management commissions.
Automated binary managed account
Above we have mostly described different features of manually managed accounts. Yet there is an alternative to select an automated managed account binary options. Such accounts take a human factor out of the equation, which is meant to reduce the risks of making mistakes.
Binary trading robots are basically fully automatic programs that are developed by experienced traders. Automated trading software is designed to apply all the statistics, past performance and technical indicators to generate a trading decision thereafter. You can definitely find some managed accounts providers for binary options available on the market that offer their own trading systems.
Although you can agree on having your account managed by the binary options robot, we would not recommend you to do so. Usually, the firms that offer such accounts are frauds and do not deserve to deal with your hard-earned money. Moreover, manually managed account provides with the 24/7 possibility to contact your personal manager if there is a necessity. This would hardly be possible, if you ever selected the automated managed account.
There is another question that bothers traders about automated binary options managed accounts. If there is a trading robot that can bring extremely high returns in theory, why the software owner even offers a managed account to make some extra money for clients? We might leave this question on to your own judgment, but have to admit that automated managed account is unlikely to be an equal alternative to the account managed by an expert trader.
The Bottom Line
There are multiple ways to invest in binary options. We tend to think that managed binary trading account is a great opportunity to make money by cooperating with professional money managers. However, you have to do a plenty of personal research to find the best offer. A smart way to determine which managed account providers seem to be better in terms of credibility and profits is to open a free binary options managed account. This feature will grant you the possibility to check the skills of your account manager and decide whether the end results satisfy you or not.