MAM and PAMM are two account management methods that allow managers to directly administer several accounts at once from a single terminal without having to create an elaborate investment fund.
The profits and losses of these two methods of management are distributed evenly among the managed accounts. These accounts are connected directly to the account manager’s main account therefore all trades are made instantly by the manager and the results of the trading actions can be seen in the clients’ accounts summary.
What is a PAMM account?
The Percentage Allocation Management Module, also known as PAMM, is an account that features a simple management module that splits the size of trades in accordance with an allocation percentage. This is a simple yet highly efficient solution offered by many professional Forex brokers in order to ease the access of investors and fund managers. With the help of a PAMM account, a trader picks if his account can be managed by one or more managers simultaneously.
PAMM is considered to be a very smart method of conducting management actions over several accounts on behalf of clients by investment managers.
This type of system is usually simplified with the help of a broker that takes a certain amount of funds from the investor and continues by enabling the account manager to deploy specific trading services: manual or automated. Combining these two methods ensures a greater chance of success for all the parties involved in the trading process.
A PAMM account is considered to be the main account and it incorporates a monetary capital that is equal to the sum of all the sub-accounts.
There is an option where all trades are automatically duplicated in the sub-accounts based only on a strict predefined percentage. There are, of course, some exceptions in which the managers of the accounts are not entitled to the entire array of trading actions, or they only act with only a limited number of actions. As a safety measure, there are some cases where the investors are the only ones capable of making deposits as well as withdrawals.
What is a MAM account?
A MAM is also known as a multi-account manager and it shouldn’t be mistaken for the MetaQuotes multi-terminal system, which, in comparison to a MAM account has many limitations. A MAM account enables its customers to make use of an allocation method, this method is similar in many ways to a PAMM account, but it grants a better dexterity in allocating the trades and risk adjustments based only on the type of risk profile.
A manager can simply share trades on a predefined basis and this means that he can configure the number of traded spots by each and every individual account. This fixed allocation technique can also be done using a Lot Allocation Management Module also known as a LAMM account.
The manager also has the ability to modify the amount of leverage value on the accounts and this comes in only when the users demand a bigger level of risk.
The multi-account manager accounts are specifically designed for account managers and it enables them to modify the level of complexity as well as the value of potential returns. This action can be made by assigning higher leverage to some sub-accounts.
Other efficient measures also include adjusting leverage as well as a risk-management option on various sub-accounts, this in return offers a lot more flexibility and choice on the trading markets. A lot of caution needs to be taken here because changing the risk levels can be extremely dangerous for the account, but it can also generate a significant amount of profit.
In short, the multi-account manager is perfect for investors that use a high-risk tolerance which definitely requires great knowledge of the market fluctuations.
It is a well-known fact that most Forex traders often turn to the advantages of investing in a well organized managed account after failing themselves on the market.