PAMM, short for Percent Allocation Management Module and MAM, Multi Account Manager, make it easy for forex fund managers to execute a trade and copy them into ther trading accounts. A Forex fund manager basically trades on behalf of their investors. Without PAMM or MAM, it would quite difficult for a forex fund manager to replicate their trades in real time. PAMM and MAM are modules in forex trading that allow access to advanced features for forex fund managers.
In this article, we’ll take a look at the details of forex PAMM and MAM.
Multi Account Manager, also known as MAM integrates as a plugin with the MetaTrade platform. By making use of MAM, the forex fund manager is able to copy their trades across different managed forex accounts with just one click. This works regardless of the trade that was executed, manual or by an expert advisor. When a trade is executed on the master account the MAM executes the same across all the managed accounts in real time. MAM offers great benefits for a forex fund manager which also includes automatically deducting the fund manager’s fee for trading the managed accounts in forex.
There are different ways in which the quantity or the lot size is decided for each of the managed accounts when a trade is applied. LAMM and PAMM are commonly used aspects that determin the size of the lot and to which account it should be applied to.
What is Lot Allocation Management Module?
Under a lot allocation management module a customer or a managed account is traded using the same lot size as the master account irrespective of the account size for the client’s forex account. LAMM is ideal when the managed accounts have the same size as that of the money manager. The problem arises when the size drop below the main trading account. This greatly increases the risks and makes use of higher leverage. Under the circumstances, making use of PAMM is more preferred.
What is a Percent Allocation Management Module?
PAMM or Percent Allocation Management Module addresses the issue posed by the LAMM. A PAMM distributed the profits and losses across incurred by the main trading account to all the managed forex accounts. The amount of distribution is in the same proportion as the size of the managed account and does not consider the lot size used for the trade.
Let’s take this example where the manager’s account size is $5000 and managed two accounts A and B having a capital of $2,000 and $3,000 respecitively. The combined amount in this PAMM portfolio is $10,000.
In terms of the distribution the manager’s account is at 50 percent, A at 20 percent and B at 30 percent. Based on this percent allocation the profits and losses are applied to the account accordingly. So when there is a profit of $1,000, the manager gets $500, A gets $200 and B gets $300. The same holds true if there was a loss of $1,000. This is the most simplest illustration of how Forex PAMM works.
What are the benefits of using a MAM and PAMM?
The Multi Account Manager and PAMM makes it easy for the forex money manager to focus on the core activity, which is trading. The MAM and PAMM modules provides the owners of the managed forex accounts access to their portfolio in real time as they can watch the trades being executed in a live environment. MAM module is used by the forex money managers and assists them to keep a track of their trades, investment, portfolio management and much more.
When opting for a PAMM account, investors are required to sign a power of attorney that allows the forex money managers to access the client’s funds and trade with them.
Choosing a managed forex account.
There are many forex brokers that PAMM or managed forex accounts services in the market today. From the lot, only a few forex brokers stand out when it comes to offering a world class service in aspect of Forex PAMM accounts.
