PAMMMAM & PAMM Account
MAM (Multi-Account Manager) and PAMM (Percentage Allocation Management Module) accounts allow fund managers to manage multiple accounts from a single account without having to create an investment fund.
The PAMM Master account balance represents the total amount of all clients' deposits. To ensure the security of investors' funds, client deposits remain in their own trading accounts, the manager does not have access to these accounts and therefore cannot make any withdrawals. The individual investors are the only ones who are able to make deposits & withdrawals to/from these managed accounts. However, the performance fees that are earned by account managers are automatically withdrawn from clients' accounts, in accordance with the terms of the contract.
ABOUTWhat is a PAMM account?
Features of MAM / PAMM
- Operate third-party accounts through the manager account.
- Main holder can withdraw and deposit at will.
- Manager can update EAs or manage personal accounts.
- Cheaper commission and spread are obtainable.
- Operating costs are often low because it is only the relationship of investors and operators.
The PAMM account features a management module that distributes the sizes of trades according to an allocation percentage. This solution is offered by many forex brokers for investors and fund managers. With a PAMM account, an investor can also allocate a percentage of his account to one or more managers.
The manager's PAMM account is a large "main account", whose capital is equal to the sum of the sub-accounts.
The manager's trades are automatically replicated in the sub-accounts according to a percentage basis. For example, if the trader makes a 100-lot trade on the EURUSD, the trade is divided among the individual sub-accounts (clients) into smaller parts based on the percentage of equity of each sub-account in relation to the master account. This means that if the size of an individual sub-account is equal to 1% of the main account's equity, the size of the trade on this account will be 1 lot (1% of 100 lots).
What is a MAM account?
The MAM account should not be confused with the MetaQuotes multi-terminal system, which has its limitations. A MAM account allows you to use the percentage allocation method like a PAMM account, but it provides greater flexibility to allocate the trades and adjust the risk of each sub-account based on the clients' risk profiles.
For example, the manager can allocate trades on a fixed basis, which means that he can define the number of lots traded by each individual account. This fixed allocation can also be done using a LAMM (Lot Allocation Management Module) account.
The manager can also change the amount of leverage applied to the sub-accounts if his clients want to take on a greater level of risk.
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