MAM and PAMM Trading Accounts: What Are They And What They Do?

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Every broker aims to offer multiple investment options to their clients, and especially to those who do not intend to trade on their own. We’ll be discussing two choices that are both highly sought-after in the trade industry. They offer newbie and experienced traders a simple option to trade. If you are fascinated by what the forex market can offer then these solutions are the best. If you’re looking to earn a passive income or cannot devote full attention to forex trading, you can opt for MAM or PAMM accounts.

Because the number of people entering the forex market is increasing every day, new methods are being developed to assist traders. Of them, PAMM is the most innovative method. It stands for Percent Allocation Management Module. You can allocate trades according to your preference percentage using the PAMM account. This is a service offered by many brokerages to fund managers and investors. It is possible to easily distribute accounts to different managers with a PAMM account in forex. The majority of PAMM accounts you’ll find today deal with combined funds and do not execute trades on investors’ accounts.

In PAMM, the investors assign their money to a trader or money manager they select. The manager is then accountable for the management of these funds across multiple trading accounts. Managers are not able to access client deposits directly to ensure their safety. Managers are not able to withdraw or make deposits. Only investors can transfer funds and deposit them into managed accounts for trading. Managers can still claim performance-related fees from managed accounts as they like, as long as the contract permits this.

The MAM account works in the same percentage system as accounts for the PAMM account. The only difference is that the MAM account has more flexibility when it comes to diversification of trades and altering the risk for each sub-account. You can modify the risk ratio according to your risk tolerance. On the other hand, multi-account management permits users to connect several MetaTrader accounts into one master account. This is a way for investors to replicate trades between their accounts. The MAM system is extremely popular among money managers. A master trader performs all the copying and configurations, while investors are only required to state their investment amount and their risk ratio. MAM allows investors to have full access to their accounts. PAMM forex brokers recommend that all their investors diversify risks by simply distributing funds over several PAMM accounts. 

One can affirm that the job of PAMM is completely distinct from MAM because PAMM is known for maintaining good relations between investors and money managers. PAMM accounts are not managed by money managers and investors are in complete control of their funds. Investors can also deposit and withdraw money at any time , without risk. To conclude, the PAMM solution has more to offer than the MAM account.

 

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