There are several money-managing systems available on the FX market. PAMM, LAMM, MAM might all sound similar, however, there are certain differences between the systems that should not pass unnoticed. Before investing in a managed account, setting up an account as a manager, or offering the system to your clients as a broker, you should do your homework first: not only pre-evaluate the specifics of the managed account type, but also – make sure that the system offers suitable conditions for you to do any investment at all in the first place. In order to make the picture clearer, lets have a look at the specifics of the 3 systems and how they differ.
LAMM (lot allocation management module) can be called the predecessor of PAMM, since it does not function according to the size of each individual investors account. Each and every customers account, would automatically increase by one standard lot whenever the manager buys one standard lot of a currency. This system could be beneficial in the case when the customers’ investment is the same as the manager’s, however, there might be more arguments against the system in the case if investors portfolio is much larger than the managers.
MAM (Multi-Account Manager) accounts allow manager to assign a higher leverage to specific subaccounts, if any of the investors have such preferences. This feature makes the MAM accounts particularly suitable for investors with a high-risk tolerance.
PAMM (percent allocation management module)
Is different from other management systems, since the investors’ portfolio is affected depending on the size of the respective deposit. Each managed account has its own ratio in PAMM according to its volume. Typically, PAMM requests financial participation by the manager; therefore the manager is also trading for his/her own interests. The managers’ activity results (trades, profit and loss) are allocated between managed portfolios according to the ratio.
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This system is preferred by Money Managers for the broad options PAMM offers: 1) flexibility in investment conditions (the trader sets the amount of commission and trading period by himself, rollover time can be set at any hour, etc.); 2) TOP Manager list, which is created according to performance and publicly available for the investors, works also as a promotion tool for the Managers’ skills; 3) trading reporting is available according to the Managers’ professional needs.
Investors, however, choose the PAMM system due to the wide range of professional Managers available, whose style of trading and results can be examined via the TOP list. Investors have the ability to monitor trades in real time, which gives more certainty and control over the investments. Additionally, an investor can setup the allowed drawdown levels and nominate, or change the traders in the TOP list. On the side, any Investor is welcome to participate as an Introducing Agent to attract more investment.
Soft-FX PAMM SaaS can be integrated with MT4 via manager API. Due to the simplicity of the system, integration of PAMM SaaS requires no significant investments, due to its compatibility with MT4 and implemented web interface, which is customizable for each broker.
To sum up, one thing is clear – managed account types differ, but so do the preferences of managers and investors. As a broker, you should first go more into detail of your customer profile and decide which system (MAM, LAMM, PAMM) would fit the individual taste of your clients (managers/investors). Which would be the opportunities that your clients would benefit most from?
If your managers demand flexibility – they’re typically eager to set up their accounts and decide on the details by themselves, your investors demand transparency and are always willing to evaluate the performance of managers beforehand, however, you are not willing to invest a large amount on the setup of the system itself, Soft-FX PAMM might be the perfect solution for you. For more details, please visit the following link.