How To Efficiently Manage Funds With MAM/PAMM

Getting long-term success in any field or profession requires consistent efforts and a disciplined approach along with relevant knowledge and skills. The same set of rules also applies in forex trading. Becoming a successful forex trader, in the long run, won’t be possible until and unless you possess a good amount of understanding and work on building some expertise. Like any other skilled professional, a trader also grows with the hands-on experience they get in the forex market. But beginners also have a chance to trade like an expert by signing up for a PAMM or MAM MT4 or MT5. By the end of this article, you will get to know everything about managed accounts in forex and how you can use them to your advantage.

The inner-workings of MAM/PAMM accounts

MAM stands for Multiple Account Manager and PAMM stands for Percent Allocation Management Module. Both serve the purpose of having a professional trader or fund manager to manage your trading accounts. In the first glance, MAM account and PAMM account may seem more or less the same but there are a couple of features that make them different from one another. For PAMM account forex, the allocation of trades will be done on a percentage basis just as the name implies. Whereas for MAM account forex, there is more flexibility as the fund manager can choose to allocate trades on fixed-lot basis and may even decide to avail higher leverage on the investor’s account managed by him/her. In return for their management services, PAMM/MAM accounts managers will be compensated on a profit sharing basis based on their agreement. 

How to use MAM/PAMM account forex as an investor

An investor is someone who decided to avail service offered by MAM or PAMM accounts managers by allowing them to trade and manage their funds. Anyone and everyone can become a MAM/PAMM account investor irrespective of their knowledge and experience in the forex market. Beginners and traders who lack time to manage their own account can benefit the most from these types of accounts. They get an experienced professional of their choice to take control of the trading activity which allows them to make profits without trading themselves.

They just have to open an account with a broker who provides MAM/PAMM accounts service and then select fund managers based on their requirements. They can pick multiple managers for their account based on how much capital they have in the first place. They still have total control over the funds in terms of deposit and withdrawal. In case of MAM account forex, investors can also make decisions regarding the max amount of leverage and can also specify the percentage of risk for their account. The MAM account manager will be planning and entering trades based on the investment risk parameters set by the investor.

How to become a fund manager for MAM/PAMM account forex

If you are a profitable trader with enough experience in the forex market, you can build a career as a MAM/PAMM accounts manager. You will be able to manage multiple accounts with a single master account provided by your forex broker. But getting started as an account manager will require meeting the criteria set by a UK broker. This may be different with each broker in regards to minimum and max amount of funds you can manage, number of investors/clients one can accept and compensation schemes. You may also specify the subscription and commission or management fees for your managed accounts.

So, you need to check those before signing up with a broker to become a fund manager. In case of PAMM accounts, you will also be trading with your own funds alongside the funds from investors. Some brokers will also help you in growing your account by giving access to various tools for promotion such as referrals, banners, performance links, landing pages and more. Such tools are useful for attracting more investors to avail your management services. The profits and losses will have to be shared between investors and fund managers. Also, your commission will vary depending on your performance as a trader. 

Things to keep in mind while managing MAM/PAMM account forex

  • Transparency – Your clients or investors are trusting you with their hard earned money even though it is just for trading. You will be in charge of managing their trades and they would expect you to be as transparent as you can and share all the relevant information that they are entitled to know. So, never hide the details regarding your trading style or strategy such as the risk involved. It doesn’t mean you need to disclose your entire trading system but just share some bits and pieces to help you win the trust of investors.
  • Manage their funds as your own – This is easier to do when you have your own funds and capital to be risked while managing the funds of investors. Investors are likely to trust you more when they learn that you are also following the very same strategy for your own account too. In this way, you will be managing the investor’s funds with the same diligence that you would have while trading with your own money.
  • Choose the best MAM account broker – Managing multiple accounts from a single terminal can be a daunting task. You will need a good amount of support from your broker to do this properly. So, make sure to filter your choices and opt for one of the best MAM account brokers. It will be ideal to pick a broker who allows investors to monitor the account performance in real time as a transparent system will always attract more investors.
  • A powerful trading system – A profitable trading system is a must have for becoming a successful trader. But a MAM/PAMM accounts manager will have to put some extra effort in order to devise a trading system that would work for multiple accounts to attain the desired trading results. Clearly define your entry and exit points for each trade whether it’s a profit or loss. Trading with predefined stop loss and take profit levels will help you to manage the risk effectively while handling a large amount of funds. A trading system that is backed by a good risk management plan will always be a safe haven for investors who are risk averse.
  • Win rate and risk/reward ratio- We can’t go without talking about the importance of an optimal risk/reward ratio. The recommended risk/reward ratio is 1:3 as attaining a break even would be easier with 33% of risk. But as a trader you are free to set the risk/reward ratio in accordance with your trading plan. One interesting thing about the risk/reward ratio is that those with a low win rate can still be profitable if they have a higher risk/reward ratio. And those who have a higher win rate can get away with a lower risk/reward ratio. So, striking a balance between the two is crucial for developing a profitable trading system.

In the end, making an investment in MAM/PAMM accounts and being a fund manager for managed accounts have its pros and cons. To the investor, they get an expert to trade on their behalf but profitability is not guaranteed all the time. And for fund managers, there will be some challenges and hurdles that need to be faced head on for efficiently managing multiple accounts. But everything gets easier as you gain more knowledge and experience in the financial markets. Taking the first step may be hard but after that you will see yourself moving in the right direction over time. We hope you will find this information on PAMM accounts and MAM account forex to be of some use in your journey ahead. Take your time to explore and experiment as the forex market is a place full of opportunities for those who are willing to take some risk.