Multi-Account Manager (MAM) and Percentage Allocation Management Module (PAMM) are an emerging and exciting trend in the world of forex investing.
Both of these are types of investment accounts that allow retail investors to tap on the expertise of professional traders, while facilitating traders in expanding their audience reach.
While MAM and PAMM share some commonalities, they are both different money management solutions that cater to different needs for investors and traders alike.
Here’s an overview of MAM and PAMM forex accounts, their core differences, and what to look out for when choosing between the two.
A MAM forex broker account allows professional traders to manage multiple client accounts from a single master account.
The master account is controlled by the trader, and is linked to several sub-accounts, each owned and controlled by a different individual investor. The funds of the investors are pooled together and managed by the trader.
In a MAM account, the trader can allocate trades and manage risk on the master account.
As the trader executes trades in the master account, the same trades are automatically replicated on the individual sub-accounts according to the allocation percentage.
Traders can also make manual adjustments to allocation percentages, designate different volumes to different sub-accounts, or group sub-accounts together for different trading strategies.
While the master account is controlled by the trader, the investor has full control over their own sub-account.
Investors can view their sub-accounts in real time, and can intervene to alter or close trades placed by the trader. Investors can also choose to deposit and withdraw funds from their sub-accounts at any time.
A PAMM account is a type of investment account offered by some forex brokers, which allows retail investors to allocate their funds to be managed by experienced traders.
An investor deposits funds into a PAMM account, which are then pooled together with funds from other investor accounts. The appointed trader or investment manager then makes investment decisions on behalf of the group.
Each investor’s share in the account is proportional to the size of their investment, and the profits or losses are distributed accordingly. The trader typically charges a management fee for their services, which are deducted from the account’s profits.
PAMM accounts allow investors to take advantage from the expertise of professional traders without having to actively manage their investments on their own.
Additionally, qualified traders who manage PAMM accounts will be screened and vetted by forex brokers beforehand. Hence, investors will be able to view information such as performance history and investment strategies to help them make informed decision.
|MAM (Multi-Account Manager)||PAMM (Percentage Allocation Management Module)|
|Allows traders to seamlessly execute trades across multiple client accounts.||Allows investors to tap on the expertise of professional traders.|
|Funds in client sub-accounts are pooled together to provide capital for trading.||Investors and traders pool their funds together to trade.|
|Through a master account, traders plan and execute trades that are automatically replicated across client sub-accounts.||Investors and traders share in profits or losses in proportion to their share of the pool.|
|Investors who hold sub-accounts can act independently to close trades, deposit funds or make withdrawals at any time.||Investors only make investment decisions at the start of each investing round, after profits or losses from the previous round have been settled.|
You should consider MAM or PAMM based on factors such as your experience level, goals and objectives.
Note that MAM and PAMM can both be used by retail investors who invest for personal investment, as well as professional traders with a career managing investments on behalf of clients.
Hence, for clarity, we will examine both platforms separately.
In general, MAM accounts are catered towards:
In fact, MAM accounts are designed to execute trades across different client sub-accounts in tandem with trades executed by the master account. Instead of having to make multiple trades on every single client account one by one – traders simply only need to make one trade.
As you’d expect, this creates massive savings in time and effort, which enables professional trades to significantly increase the number of clients they can represent. In turn, this raises the earning potential of traders.
For investors, MAM accounts facilitate access to expertise and knowledge of professional traders, while offering a higher degree of control. With an MAM account, an investor can freely close trades placed by the master account, or withdraw and deposit funds at any time.
Generally, PAMM accounts are geared towards
PAMM accounts offer investors access to forex market opportunities even if they lack the time, knowledge or inclination to make trades on their own. Investors need to select a professional trader, who is then responsible for trading on their behalf.
Because the traders appointed as investment managers also allocate their own funds alongside investors, investment risk is shared among all parties involved. Profits or losses are distributed according to each party’s share of the pool.
The pooling of funds benefits professional traders as it furnishes them with a larger capital to trade with, potentially overcoming high capital requirements mandated by certain markets or strategies.
Importantly, traders representing a PAMM investing pool are also entitled to a cut of any returns made, which is paid out before profits are distributed.
This is on top of the share of profits that the trader is entitled to for participating in the pooled funds.
Vantage’s MAM Account and PAMM Account offers best-in-class trading capabilities and account management functions that facilitate Fund Managers and Investment Managers to seamlessly pool investor funds, manage multiple client investments, and custom trading strategies groups.
Whether you’re a retail investor looking for more features, or a professional trader seeking to take things to the next level, Vantage MAM Account and Vantage PAMM Account can be for you. Talk to us to learn more today.
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