MAM, PAMM, LAMM accounts
There are a number of choices in the world of foreign exchange trading. One of these options is to open a managed account with a forex broker. And if there were not a few different asset management systems, the decision would be easy. And only a few words would be needed to explain what to look for when opening a managed account.
But nothing is as easy as it could be, especially in today’s modern world. And with managed forex accounts, that’s no different. PAMM, LAMM, and MAM may sound similar, but there are some important differences, and it is very helpful to know these differences if you want to make an informed decision.
MAM and PAMM accounts offer fund managers the ability to manage multiple accounts from a single account without the need for a mutual fund . Managed forex accounts are accounts in which a fully separate account with a broker is owned by a single investor. However, the account is managed by a professional trader or asset manager who transacts the account on behalf of the account holder. The account holder retains full control but allows the asset manager access.
Three different systems – and how they work
In terms of forex trading, there are brokers with MAM, PAMM and LAMM. Sounds a bit confusing, so let’s look at the differences.
LAMM – Lot Allocation Management Module
In this type of trading system, a trader is allowed to distribute different trading lots into the accounts of a single investor. The trader has the flexibility to use different levers for different investor types.
MAM – Multi-Account Manager
This type of account is a combination of LAMM and PAMM, allowing greater flexibility for the trader managing the accounts of investors.
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PAMM – Percent Allocation Management Module
In this type of system, profits, losses and fees are distributed in equal percentages. All accounts earn the same percentage return, regardless of account size. Investors are actually part of a pool that contains separate accounts or sub-accounts. These are traded by an asset manager or trader who has received a limited power of attorney status. The manager has a master account in which the equity equals the sum of the balances of the subaccounts.
Regardless of the type of account you choose, you will be granted live read access to the managed account at all times. This is done either via an online report viewer or via direct access to the trading platform. The balance of the account as well as profits and open and closed trades are all clearly visible. If a trader wants to place his own trades on both types of account, this is not possible. Unless the restricted power of attorney is revoked.
What’s the point with a managed account?
With a managed account you get maximum security, control and transparency. But how does it work? An investor chooses a reputable broker and opens a trading account. Funds are added to this account, and only you have access to the money. However, the money is added to a pool, which is then professionally traded by an experienced asset manager or trader. The good thing about these types of accounts is that an investor can see exactly what is going on at any given time and he can choose to revoke the power of attorney if he does not by the way his money is traded is satisfied. There is no vesting period, and an investor can unsubscribe at any time.
From the asset manager’s point of view, all investor accounts can be traded together like a large account using LAMM, PAMM or MAM software and technology. Everything is handled by the broker via MAM, PAMM or LAMM, which is a smooth experience for investors.
A simple and secure way to be in the world of foreign exchange
With a managed Forex account offered by a broker with PAM, MAMM or LAMM, an investor can always keep their finger on the pulse of the times. It does not take years of time, money and self-experimentation to get to the point where profits can be earned on their own. Conducting one’s own personal trading can be very time consuming as market movements need to be monitored around the clock. Managed accounts solve this problem, and investors who do not want to trade themselves get the support they need.
Of course, we should mention that there are no guarantees in the world of foreign exchange. Similar to other forms of investment, the value of currencies can go down as well as up. Using brokers with PAMM, MAM or LAMM allows you to reduce the risk.