Understanding the MAM, PAMM, LAMM Account
Forex trading requires opening an account, whether it is a demo or live account. However, the demo account can be opened free of cost, and you don’t need to worry about the investment. But, to generate profit, you just need a live account with real investment. However, as a newbie or inexperienced trader opening a live account is confusing. Most of the time, traders invest in their own account and make the necessary investments to initiate the self-trading. There are other types of accounts where investors don’t need to do any trading by themselves, which are categorized as PAMM account, MAM account, and LAMM account.
These are called managed accounts, which are perfect for the busy trader or new traders who have a good amount of investment.
Trading with a managed account could be fun if your manager has enough experience to play with your money. Here you will get to know all three managed account types and their working procedure thoroughly.
Managed Account Platforms
Having a broker account is mandatory to access any managed account. However, you may get confused about choosing the right broker. You may check the forex broker reviews to sort out the best forex broker to open your required managed account.
Opening a managed account is quick, but the first thing you have to do is select the account from three managed account types.
- PAMM account
- MAM account
- LAMM account
PAMM is known as the percentage allocation management module, which is also named as a percentage allocation of money management. PAMM follows a pooled money management strategy as the investor allocates the money to the qualified manager to the trader on behalf of the investor. Besides, the appointed PAMM account forex manager can manage other accounts simultaneously. However, as an investor, you can track everything from your account except initiating any trading procedure. However, the manager tends to make the maximum possible profits from these investments. There are risks too, so they might fail to generate returns, which you have to keep in mind.
Although the PAMM manager makes the trading as a whole, each investor will receive a part of the profit after the trading.
PAMM account forex managers hold a limited power of attorney on the invested capital by the investors.
PAMM Account Forex Working Procedure
PAMM accounts working procedure is simple. First of all, the manager has access to all the investor’s funds. However, the funding in the manager’s account should be equal to the funding from individual accounts. So, the manager will make the trading from his master account, which you can see from your personal account as well as through online reporting.
The information you can see from your end is the account balance, active transaction, along with the open and closed orders. In addition to that, a profit and loss statement will be available too.
Multi-Account Manager stands for MAM account, which allows a trader to control different trading accounts from a single master account. However, to operate under MAM, you need to open an account with MAM account brokers. Usually, a MAM account combines different individual accounts into one as managed funds. Later the manager can do the trading from that single managed fund.
MAM Account Forex Working Procedure
A master account is used to complete all the orders in MAM account brokers. Furthermore, MAM investors can trade from their accounts too. However, when a manager places an order, the MAM trader can modify that order. The account itself keeps records of all the modifications.
The MAM investors will have to pay performance fees to the account manager. However, the MAM account brokers provide the overall controlling power to the investor to do whatever they want. This feature makes MAM the most advanced managed account. In addition to that, the MAM account can get some common features of the PAMM and LAMM account.
LAMM account is the lot allocation management module, in which the investors can choose a specific amount to trade from their investment. In LAMM, multiple lots are used to calculate the relevant loss or profit.
LAMM Account Working Procedure
LAMM account’s working procedure is similar to the MAM account. But trading on LAMM can reduce the potential risk significantly. However, the LAMM method is used on an account that has a large amount of capital. Besides, LAMM account holders may get benefits in the case of liquidity.
Benefits of Trading with a Managed Account
A managed account can get you some benefits that are not available in the retail account. So, let’s see the benefits of managed accounts.
- Managed accounts are transparent as traders can see everything about the account.
- These accounts are safe as you have total control over your investments. However, you have to make sure that you opened the account with the best forex broker by looking at the top 10 forex brokers.
- Investors can allocate the money according to their wishes and appoint a manager to take care of their trading.
- The investor can watch all the updates from his account. So, he will never miss any trading events in his account. That’s how its managed account ensures transparency again.
- The investor has the right to cancel or modify the transaction initiated by the account manager and forward the fund to another managed account operating by a separate manager.
- The investor can withdraw his fund and walk away as the investments are not locked.
- If the managed account has a large capital, the profitability may increase than a retail account.
Criteria to Select a Managed Account
Firstly, you have to check out the broker, whether it is an average broker or the best forex broker in the world. Next, you may also need to check its forex trading platforms platform, such as if it is MetaTrader 5 forex brokers or MetaTrader 4 forex brokers. Last but not least, you should have the ability to judge the potential account manager. You may need to check out the manager’s portfolio.
PAMM account, MAM account, and LAMM account are different according to the working procedure but contain the same nature. These accounts are feasible for traders with a lack of knowledge or expertise. However, we recommend that all the investors should do their homework before selecting the desired managed account.
This article can work as your homework as we have mentioned all the details about three managed account types and their working procedure. Besides, you should keep in mind that managed accounts don’t guarantee to give you profit always, as forex trading is a risky task to do. But they can reduce any potential risk than that of a retail account. With a better understanding, you can securely invest in a managed account.