Managed Accounts: MAM vs. PAMM Differences

Without needing to construct an investment fund, fund managers may manage several accounts using MAM/PAMMor MAM (Multi-Account Manager) and PAMM (Percentage Allocation Management Module) accounts.

The managed accounts share the losses and profits of the MAM or PAMM manager. All the manager accounts are linked to the primary account of the account manager, and all transactions done are proportionally reflected in the accounts of the clients.

The sum of all customer deposits is reflected in the balance of the PAMM Master account. Client deposits are kept in their individual trading accounts for the protection of investors’ money. As a result, the manager is unable to withdraw money from them. Only individual investors have the ability to deposit money and withdraw from these accounts. However, in accordance with the provisions of the contract, account managers’ performance fees are automatically deducted from customers’ accounts.

PAMM

A management element in the PAMM account divides trade sizes in accordance with percentage allocation. Most brokers offer this option to fund managers and investors. The investor decides what percentage of his account should be managed using a PAMM account.

A sizable “primary account” with capital similar to the total of the subaccounts makes up the manager’s PAMM account.

According to a percentage basis, the trades of the manager are automatically copied. For instance, if a trader performs a transaction of 100 lot on EUR/USD, the transaction is split up among the many clients or subaccounts. If the size of a subaccount is 1%, this indicates that the amount of the deal on this account will be 1 lot.

MAM

MAM accounts should not be confused with the multi-terminal system of MetaQuotes.

Similar to a PAMM account, MAM enables the use of the allocation of percentage approach but offers more flexibility in how trades are allocated. Also, it adjusts the risks of subaccounts depending on how much risk the customers are willing to take. For instance, the manager can decide how many lots should be traded by subaccounts. He can do this by allocating transactions on a predetermined basis. The manager can change or edit the leverage of subaccounts when they wish to assume more risk.

In conclusion, MAM/PAMM accounts help investors increase their chances of making a profit. These solutions provide fresh possibilities and a cutting-edge, simple method for investing in any form of the financial market. In addition, this is a good option if traders want to track and evaluate other successful traders who place trades based on their expertise, knowledge, and experience.