In the foreign exchange online trading industry, PAMM account, LAMM account and MAM account, these three kinds of accounts are financial management accounts for clients, that is, account managed by fund managers. Investors and account fund managers distribute profits according to the agreed ratio, that is to say, account managers Income is derived from account performance. Other types of financial assets are rarely traded in this type of account, but in fact, traders can technically trade any kind of financial instrument on this type of account. This article will introduce the concepts and differences of these three accounts.
PAMM
PAMM account, that is, Percentage Allocation Management Module, or percent allocation money management – Wikipedia). As the name implies, it refers to a method in which an investment manager (account manager) performs account management services on behalf of its clients, and the transaction and related profits/losses, interest and commissions will be distributed in proportion, and the account manager will also follow the agreement with investors The proportion to draw the corresponding remuneration. Some investors will choose to open a PAMM account due to time and inability to operate, and let professional traders manage the account on their behalf. In addition, fund managers who use consistent trading strategies and leverage ratios for different accounts generally use PAMM accounts. Of course, not every broker will offer PAMM accounts.
The entire account is composed of PAMMTrader (PAMM trader) and PAMM investors (PAMM investors), and the account can still operate without PAMM investors (PAMM investors). In the PAMM account, PAMM Trader (PAMM trader) and PAMM investors (PAMM investors) jointly bear the risk of funds in the account. The PAMM of most platforms only pays PAMM Trader (PAMM trader) Performance fee ( returns/management compensation).
LAMM
LAMM accounts work slightly differently, as opposed to PAMM.
LAMM account, that is, batch (lot) allocation management model (LAMM, Lot Allocation Management Module), if PAMM is to allocate the part of the transaction by percentage, LAMM is based on the transaction "lot" as the unit. The account will pass through a management interface, and each account is regarded as an independent individual. The account under the name of LAMM is a read-only account, and customers cannot trade by themselves. Since the money manager manages each client's account separately, there will be differences in margin, profit and loss, and some other fees for different customers.
Generally speaking, fund managers who use different trading strategies or different leverage ratios for different accounts will use LAMM. However, LAMM accounts are seldom used now. There is a common saying that LAMM imposes a heavy burden on brokers, liquidity providers and MetaTrader servers.
MAM
MAM, that is, Multi Account Manager, the account is equivalent to a master account, and there are several follow-up accounts below, which are independent of each other and can be regarded as a form of documentary (see Note). Investors only need to enter the total number of transactions, and the system will execute the transaction according to the allocation method selected by the investor, and automatically allocate the transaction number to different individual investors. Account managers can quickly, efficiently and accurately trade for multiple investors through a single trading account.
MAM generally has 4 ways to place orders, according to which each order is equal to the total transaction volume, equal share, equity ratio, and available margin ratio. MAM accounts are suitable for investors with a high level of risk tolerance and market understanding.
In general, the simple understanding is that the PAMM account is to collect everyone's money as one account and operated by the fund manager. LAMM refers to the fund manager's different operations on different customer accounts in a unified interface, and the MAM account is operated by the fund manager. Master account, other accounts follow.
Note: The difference between MAM and documentary system
The principles between the two are actually very similar, but there are still differences between the two in some respects.
For example, the transaction direction of the sub-account of MAM is consistent with that of the main account, that is, when the main account makes a profit, the sub-account will also make a profit. Under the copy system, followers can choose forward copy or reverse copy, and there will be no restrictions. And the investment method of MAM is that the system executes the transaction according to the allocation method selected by the investor, and then automatically allocates the trading lot to individual investors with different amounts; in the documentary mode, the investors in the sub-account are as followers Orders are placed, not assigned.
In addition, for the multi-account management system, the allocation of funds is in proportion, and the total amount of funds in the master account should always be equal to the sum of funds in the sub-accounts, while there is no such restriction in the documentary system.
Comparison Chart of Three Types of Accounts
However, with the rapid development of foreign exchange trading services, fraudulent money managers have also appeared in the industry. Financial regulators in the US, UK, Australia and other countries have taken steps to curb the practice of deceptive sales to the public and unlicensed advice.
Unlicensed individuals, identified by regulators, typically promise very high rates of return as a sales ploy to attract clients. Therefore, regulatory agencies in the United States, the United Kingdom, Australia and Europe have imposed service restrictions on PAMM account fund managers, such as leverage multiples and account managers and customers must have sufficient financial market knowledge. Therefore, investors who are interested in managed accounts should be particularly cautious, and should make extensive adjustments to each other before entering into cooperation.
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