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What to Choose: MAM Investing or Copy Trading?

7:17 AM Feb 9, 2022
4674
For beginners

Every one of us dreams of passive income. It makes us feel more confident and not worry about tomorrow. Just imagine you do not have to visit the office and still have money to live. Sounds fascinating, isn't it? Trading on any market, like foreign exchange, cryptocurrencies, stocks, or commodities, can provide you with a good income from the comfort of your own home. The only problem here is that to trade successfully, you need to have a good understanding of the markets and practical experience in trading. However, there is an alternative: meet copy trading and MAM trading!

Investing is gaining more and more popularity, as people are looking for simpler and more reliable ways to earn money. Self-trading involves a lot of learning, possible major losses in the process, and a significant investment of time and money. That is why today many traders prefer money management and copy trading.

Although in both cases other traders manage your trades, these investment methods have significant differences and therefore suit different investors. Let's see which type is right for you.

MAM Investing

This is the easiest way of investing. You fund your trading account and let the money manager work its magic. All trades, including opening, closing and changing, are completely controlled by another trader. All you have to do is monitor your equity in order to support your account in case of a drawdown.

Multi-account management system or MAM allows to connect multiple accounts to the master account and manage the trades. There is a wide range of trading settings, like your risk level and other specifics of your preferences. MAM is quite a popular solution in Forex that gives you a real chance to earn extra money, but you must be cautious when choosing a MAM provider.

Advantages of MAM Investing:

  1. You don't need to have any Forex knowledge;
  2. Trading won't take a minute of your time;
  3. Your funds are managed by an experienced trader, which gives you an advantage right from the start;
  4. You yourself choose a money manager depending on his/her trading success, trading strategy used and the risk level;
  5. The high water mark system implies that you will only pay a commission if your account makes a profit;
  6. At any time, you can choose another money manager if the previous trader does not suit your goals.

Disadvantages of the Method:

  1. Part of your profit will go to the money manager;
  2. You won't have access to trades on your account: you won't be able to close a position that you think is a failure or set exit points that you find more appropriate.

MAM investing is perfect for complete beginners who don’t want to go through even basic trading training and cannot find the time to track the trading process in their accounts. You just have to choose an experienced trader with high results and wait for the profit.

Copy Trading

This investing method involves automatic copying of trades to your account. Here you will need at least basic knowledge of trading, since it is you who will monitor the account status, not another more experienced trader.

Social trading, also known as copy-trading, is an investment system that allows successful traders to share their trades with other investors and receive a commission in case of profitable trade. This type of trading is a "Holy Grail" for investors with zero experience in financial markets or who do not have enough time to focus on trading.

Copy trading may also come in handy for improving your trading strategy because you subscribe to the trading signals of professional traders.

When choosing a copy trading platform, make sure to check the conditions. Many platforms offer competitive trading conditions where you can set everything for a better experience. For example, which signals to duplicate, how much money will you have capital to invest per one trade, Take Profit/Stop Loss ratio, and so on.

Before starting copy trading, ensure you follow your trader's deals and statistics for a long time, as it will help to prevent your deposit from losses.

Advantages of Copy Trading:

  1. Most of the work, including market analysis and finding trading opportunities, is done by another more experienced trader;
  2. You are in full control of your account and can personally set exit points that suit you, as well as close trades that you think are unsuccessful or open your own positions;
  3. You don’t need to fully delve into Forex trading and study all the nuances, since the main trading will be carried out by the signal provider;
  4. The software allows you to manage your risks.

Disadvantages of the Method:

  1. Basic knowledge in trading is indispensable here;
  2. The signal provider manages the account based on his/her capital: if he/she uses a martingale strategy and your account doesn’t have enough funds for this, then you can lose your investment - be careful;
  3. You will need to constantly monitor your account: the successful outcome of some trades will often depend on you.

Copy trading gives you more freedom than MAM investing. However, you will need to learn the basics of trading and the main strategies used by signal providers.

Both methods have their pros and cons. Choosing an investment method mainly depends on how much time and effort you are willing to invest in trading. Copy trading will give you control, but it will require an investment of time and effort. MAM investing allows you to fully rely on a professional. The choice is yours.

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terms Stop Loss news trading economical calendar major news release currency pair currency rate national currency trading journal trades profit/loss emotions news release positions size Expert Advisors platform trading robot cryptocurrency volatility day trading position size lot account types cent accounts Mini account ECN Copytrade ECN accounts swap-free minimum deposit order execution liquidity providers demo accounts real account low-risk trading EUR/USD economic calendar majors cross-currencies exotic currencies base currency quote currency quotes bid ask Brexit United Kingdom European Union GBP Euro GDP WTO price levels moving average 4-hour chart 1-hour chart bulls bears false breakout cross-currency USD price action pin bar trading inside bar trading hands off breakeven stop loss 50% stop loss pin bar high-frequency trading position trading swings breakout strategy trading style Entry order Take Profit hammer shooting star inside bar pinocchio bar head and shoulders harami risk to reward ratio trading calculator trader’s age emotion control stop-hunting false signal trading session New York session Asian session non-farm payrolls fed rates decision central banks mentor teacher Forex education Forex books candlesticks bonuses tradable bonus no deposit bonus deposit bonus cashback pending orders counter-trend trading risk-to-reward ratio 1-2% rule uptrend downtrend news releases slippage emotional trading stop orders limits orders trailing Stop correlation Correlation Matrix EURUSD EURJPY RSI Overbought/Oversold indicator doji morning start candlestick pattern liquidity London session gap requote US dollar greed excessive trading Expert Advisor trading instrument Twitter Trump euro Canadian dollar Japanese yen Mexican peso currency pairs Fed China economic news currency wars USA interest rates trade agreement H1 H4 D1 sell trade buy trade price level trading system COVID-19 coronavirus lockdown checklist Default mode network Nonfarm Payrolls intraday traders lot size Stop Out margin breakeven pip point entry price chart candles weekly candle daily candle engulfing candle Doji W1 fears money management trading signals Charles Dow Dow theory primary trend Relative Strength Index signals market noise trading volume oversold/overbought corrections candle M30 GBPUSD GBPJPY pending order fundamentals Interbank order Stop order Limit order Standard account Interbank account liquidity provider M5 chart gold XAUUSD Chinese yuan flat US Dollar Fed Interest Rates inflation level XPTUSD platinum XAGUSD silver USDCNY Chinese Yuan instruments swap trading hours Buy Stop Sell Stop Average True Range ATR range sideways range price level trading scripts Excel tables entry point equity balance applications highs and lows RSI Fibonacci terminal server proxy OS Windows XP self-trading Forex advantages gap trading Fibonacci levels USDJPY Buy Limit Cherry Blossom market cycle mark-up mark-down consolidation distribution long positions short positions double bottom triple bottom double top triple top pattern signal presidential cycle Elliott wave Kondratiev wave Forex terminology quote standard lot mini-lot micro-lot cross pairs exotic pairs counter-currency terminology Margin Call long position short position buy sell candlestick chart bar chart line chart range market channel high low ADX OHLC patterns profit level martingale aggressive EAs VPS demo account EA tester trading signal chasing the market clicking the button oil trading lot EUR cent account Forex mentor novice trader emotions control fear psychological level round numbers Key Levels indicator MetaQuotes iOS Android mobile trading mobile terminal VPS server financial portals day trader position closing short timeframe fast trading news site news portal FXStreet Investing.com Forex Factory ForexLive DailyFX CPI PPI economic indicators Non-Farm Payrolls monetary policy FOMC retail sales inflation rates program installation intuition apps ECN brokers market makers financial 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morning star evening star figures diamond divergent triangle symmetrical triangle reversal signal financial intelligence financial education long-term investing triangle ascending triangle descending triangle risk control stocks Forex mutual fund EUR/AUD AUD Australian Dollar Australia ECB RBA demo live live account spike bearish spike bullish spike breathing techniques meditation unusual trading tips useful habits nutrition intermittent fasting Three indians pamm mam expert advisors start-up capital business Forex business oversold overbought reverse signals 15-minute chart full-time trading discipline drawdown inflation devaluation IDR LAK export Russia regulations regulators Central Bank quantitative easing quantitative tightening Donald Trump Joe Biden coins indexes DXY ICO Mrs. Watanabe beginner trader carry trading young traders women traders productivity self-discipline rectangle sideways channel trend figure Alexander Elder John Murphy Jack Schwager limit order leaving Forex useful tips motivation on Forex expanding triangle 5 candlesticks signal confirmation loss control currencies Germany market execution instant execution taxes laws remote trading withdrawals time management British pound BoE unemployment rate interest rate breakout Sydney session Tokyo session disposition effect continuation pattern golden rule enter trade high volatility risk trading trading discipline trading strategies Forex risks trading risks systemic risks technical risks force majeure criminal risks self-education self-study professional education Forex forecasts partnership program Forex bonuses Forex contests self-employed trader bars harami cross engulfing belt hold sandwich piercing line dark cloud cover marubozu three black crows upside gap two crows multitasking wedge figure trading sessions major trend million financial literacy budget goal setting Forex resources Myfxbook useful tools account analysis account monitoring trading analysis economic sentiment consumer price losing streak perfectionism consistent profits starting capital initial investment market psychology japanese candlesticks PAMM trust management money manager holidays market sentiment CHF CAD Great Britain pound Swiss Frank reserve currency averaging morning routine initial capital potential profit reverse pattern rounded bottom rounded top saucer inverse saucer IB Program IB Commission Sharing reversal patterns deposits payment methods payment systems local transactions trader’s block market balance