Where to go next: after the demo account (Part 2 of 2)

In this 2-part series, we have taken an overview of the options within the Forex trading world. May this be a platform to launch into further studies for yourself.


The first article included a discussion of the following options: live account, managed accounts, PAMM account, and friendly betting.


In this second article the following options are discussed: auto account, Copy trading, Social Trading Networks, acquisition or auxiliary partner, and broker affiliate; as well as a final recommendation given.



In the first article we explored these 4 options:

  1. Open a live account and become a trader
  2. Open a Forex managed account
  3. Open a PAMM account
  4. Place a bet with a friend related to gains in a demo account


In this second article we will explore:

A further set of options are to partner with the robots:

  1. Open an Auto Account
  2. Copy other traders

Other ways to get involved without bringing in capital:

  1. Partner with a PAMM account manager; rather than investing
  2. Become an affiliate of a broker; rather than becoming a client


5) Open an Auto Account


There are a few types of ‘Auto Accounts’, some of which use computer algorithms for the trading decisions, some of which simply copy the trades of other traders.


A) Algorithm ‘robot’ trading

An algorithm designed by a human is used to trade. In this case, the human is not making the individual choices, but is rather designing a system that will make these individual choices for them. These systems are designed based on technical rules of trading and they generate signals to execute the trades. The signals are information about when to open or close positions, whether to buy or sell, where to place stop-losses and take-profits, and any other order details. [1]


An investor has the choice to either develop their own algorithms based on their own technical rules, or to follow someone else’s rules. There is work involved in developing these systems, so it is up to the investor whether they are skilled and capable and willing to do this work or wish to pay for it to be done by someone else.


As an overview of Auto Accounts
The risk to your capital: is in the designed solutions of a program. You must place your confidence in the hands of other people who are designing trading systems. You are a passenger in a fully autonomous self-driving car.
To consider of yourself: in what type of trading system do you want to place your confidence: automated or controlled directly by a human? How much do you understand about selecting an automated trading program? Can you choose the appropriate self-driving car to meet your needs? You wouldn’t want to take a 2-seater on a family vacation, for example.

→ ←
+ Detach from the emotions by leaving the decisions in the hands of a program.
+ Have orders performed faster than what is possible with a human-driven account.

o The risk is still attached to a person somewhere in the scheme of things, and your capital is still at risk of mismanagement.
o The risk is shifted to the ability of a person to design a system, rather than their ability to follow their trading strategy.

– Trading programs or algorithms are usually tested on historical data to assess their performance. This means that unexpected turn of events may not be accounted for, and past performance does not guarantee future success.
– Introduces room for technical errors such as computer faults.

These are but a few of the pros and cons, while you may wish to read Investopedia’s article specific to the The Pros And Cons Of Automated Trading Systems [2].

For a description of some of the automated trading strategies, consider reading about it on BabyPips [3].

6) Copy other traders

A) Mirroring or Duplicating

Investors have the option to open accounts which simply copy the signals from other traders. These other traders may be trading using their own strategies or an algorithm-type of trading as briefly described above. There appears to be multiple tiers of mirroring accounts based on different minimum account balances and I guess this gives access to different levels of filtering within the trades available to copy, or some other perks.

B) Copy trading

Within the realm of Social Trading, this method involves literally copying the positions of another trader. An investor can use the Social Trading platform to gain information and learn about other traders’ strategies. If the investor is confident in a particular trader’s strategy then they may wish to copy those trades. This may be considered as a type of auto account because once the action of ‘copying’ has been committed, all further actions are automated until the action to ‘stop copying’ is selected. However, this being 2018, many options abound. Some versions of this copy trading are fully automated while some have manual options.

See more about Copy Trading and Social Trading in this series of articles from the Binary Tribune [4]. Just click on the left or right arrows for other articles in the series.

As an overview of Copy Trading

The risk to your capital: is in your hands in the big picture, and in the hands of the trader you are copying for the finer details. Similar to PAMM accounts, except that you execute a greater portion of the decision making as you choose when to begin copying and when to stop copying. This option is like going along with a friend on a vacation, you are simply choosing to join this other person for the ride they are on.

To consider of yourself: Do you know enough about the market and the forex trading environment to choose the correct traders? Will you be prepared to stop copying when the time is right? Will you be prepared to continue copying when appropriate even though it appears that things aren’t going well? For how long will you stay travelling with this friend? Do you have criteria like an end date, or some other stopping point along the journey?

→ ←
+ Learn from experienced traders while you follow along.
+ Option to begin and stop copying when you wish, and perhaps even manually choose details within the positions of the trader you are copying.
+ You can withdraw your funds as you wish, rather than being locked in for certain times as with a PAMM account.


  • Requires your time to study about which trader to copy and when to begin and stop copying the trader.
  • This invites the option to become skilled at choosing successful traders rather than learning about how to trade.


– Need to maintain power and internet connectivity to your computer to properly copy the trades, or partner with a broker who handles all this on a server.

– Your account is not being managed by anyone else, so the level of risk is also copied from the trader.

Options with No Capital Risk

Let’s say you don’t want to involve any of your own capital, but you still want to be a part of this money game. There are a few options available to you.

7) Partner with a PAMM account manager

Your choice: be an acquisition partner or an auxiliary partner [5].
An acquisition partner refers clients to the PAMM manager’s account and receives a percentage of the manager’s compensation from those referred clients. This has also been called an ‘Introducing Agent’.
An auxiliary partner helps with some of the ‘leg work’ for the PAMM manager like performing analysis of the markets, or performing marketing and advertising, or providing information from the news. Auxiliary partners are essentially paid by the PAMM manager as a percentage of the manager’s compensation.
In both cases, the more successful the PAMM manager is, the more the partner will earn.

8) Become an affiliate of a broker

…this is what the Forexeusd.com website behaves as.

Relationship between Affiliate, Broker, and Client
Affiliate here means someone who refers clients to the broker, and receives a payment as a percentage of what the broker earns. Introducing Agent is another term used. Both the broker and the affiliate, or agent, benefit from the relationship since the broker gains a new client, and the affiliate provides a service for a fee. Both the broker and the affiliate rely on the clients to open new currency trading positions, or in other words, they both rely on people playing the currency trading game. Whether the client wins or loses is not directly important to the broker, it is more about how much investment the client is using in the transactions. However, a winning client is more likely to continue playing the game, so this must be relevant to both the broker and the affiliate.

Affiliate and Sub-Affiliate

The affiliate will earn a percentage commision from the broker based on the clients that the sub-affiliate brings in. This commision comes from the broker, it is not cut from the sub-affiliate. It benefits the broker to have more clients so this explains why they are willing to offer this commision to the affiliate. Any sub-affiliate can also have their own sub-affiliates. It is analogous to multi-level marketing.

Affiliate and Sub-Affiliate
The affiliate will earn a percentage commision from the broker based on the clients that the sub-affiliate brings in. This commision comes from the broker, it is not cut from the sub-affiliate. It benefits the broker to have more clients so this explains why they are willing to offer this commision to the affiliate. Any sub-affiliate can also have their own sub-affiliates. It is analogous to multi-level marketing.

Our Recommendation

Open a PAMM account or Copy other traders and then use what time you have to follow along. Over the course of time, and after gaining much experience as a passenger, while also practicing on a demo account, then it may be advisable to take the wheel and try things on your own as a daytrader.
A PAMM account is better for the people who have less time.

These options are like riding a bus or a train. In this way you are avoiding the risk of driving the vehicle yourself or getting in to relatively new technology like a self-driving car. Also, as the people driving the bus or train are experienced professionals this might add to your trust of them.

The simple reason is that a PAMM account or Copy Trading has the likelihood of a much lower risk than going your own way and has similar gains; so long as you as the investor are making wise choices of which manager or trader to invest with.

When you are ready to make the choices of when to open and close positions, and you are getting more involved in following the markets and watching the news and are able to analyse the trends then it may be wise to ‘go it alone’ and keep the profits entirely to yourself.

Perhaps after some experience as a solo daytrader you would then consider becoming a PAMM manager yourself.

Or perhaps along the way you find that daytrading is not for you, but you still want to be engaged, then you may wish to take a go at introducing new clients, or taking on some of the analytical, marketing, advertising, or other work for a cut of the profits.

Choose wisely.


References (continued from Part 1)

1) Automated Forex Trading [Online]. Available at: https://www.investopedia.com/terms/forex/a/automated-forex-trading.asp [Accessed 20 Dec 2017].

2) Jean Folger. The Pros And Cons Of Automated Trading Systems [Online]. Investopedia. Available at: https://www.investopedia.com/articles/trading/11/automated-trading-systems.asp [Accessed: 20 Dec 2017].

3) Forex Ninja. 2014. 8 Types of Algorithmic Forex Strategies [Online]. BabyPips. Available at: https://www.babypips.com/news/forex-algorithmic-trading-20141112 [Accessed 20 Dec 2017].

4) How Does Social Trading Work? [Online]. Binary Tribune. Available at: https://www.binarytribune.com/social-trading-academy/how-does-social-trading-work/ [Accessed 20 Dec 2017].

5) How Do PAMM Accounts Work? [Online]. Alpari. Available at: https://alpari.com/en/investor/pamm/about/ [Accessed 20 Dec 2017].