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PAMM vs MAM
Forex trading is a rather difficult task, there are many factors that pay a decisive role in profitability. Thus, in order to achieve a comfortable level in trading, many traders spend years developing their strategies, and even then success is not guaranteed.
Managing trades is a full -time job - not everyone has the time or determination for it. Managed accounts are actually an excellent solution for those who do not want to face a large number of errors, or spend a lot of time analyzing price diagrams and indicators.
The use of controlled accounts is also not without risk. There is no 100% profitable trading strategy on the market, do not forget that the cost of foreign currencies is constantly changing, and managers for money are ordinary people with flaws.
Let's take a look at the PAMM and MAM accounts and try to understand in which case it is better to use this or that account.
KEY TAKEAWAYS
- PAMM (Percentage Allocation Management Module) is a form of investment in which traders who have proven themselves in profitable trading offer their services in managing investors' funds, as well as their own, within a single portfolio account.
- MAM is a method that allows the account manager to trade each investor’s account separately and differently, with this comes the flexibility of assigning higher leverage and other risk management parameters to specific sub-accounts.
- MAM and PAMM accounts differ in how they actually function, but both essentially allow someone to manage multiple accounts from a single main account.
PAMM vs MAM Account
Firstly, we will briefly note what each of the accounts stand for.
So, PAMM stands for Percentage Allocation Module Management - it’s a form of investment in which traders who have proven themselves in profitable trading offer their services in managing investors' funds, as well as their own, within a single portfolio account.
Where MAM stands for Multiple Account Manager - this account also allocates the money according to the respective percentage, but the money manager has more freedom in regulating risk-management factors across sub-accounts.
Let’s take a look at the table where you can see the difference more eloquently.
| PAMM account | MAM account | |
|---|---|---|
| Method | Investors’ funds are pooled into a single fund which the account manager trades. | Each investor’s account is traded separately and differently making use of different leverage and other risk parameters. |
| Structure | A single account where all funds are pooled. | Different account for each investor. |
| Profit Distribution | Distributed proportionally at the end of the agreed trading period, such as monthly, half-yearly or yearly. | Each investor takes the profit or loss the account has made at the end of the agreed trading period. |
What is PAMM Account
PAMM is a form of investment in which traders who have proven themselves in profitable trading offer their services in managing investors' funds, as well as their own, within a single portfolio account. PAMM is a managed account method whereby investors' funds are pooled and traded by an account manager so that profits and losses are shared proportionately among investors.
We invite you to try IFCM Invest PAMM accounts as an investor, connect to professional traders and let them earn for you.
What is MAM Account
MAM is a method that allows the account manager to trade each investor’s account separately and differently, with this comes the flexibility of assigning higher leverage and other risk management parameters to specific sub-accounts.
The MAM account can be more profitable, but it comes with a higher chance of losing funds, as we noted earlier, the MAM manager achieves higher profits through leverage (not only). This type of account is more suitable for investors who understand how the market works and can tolerate higher risks. An ignorant beginner should not invest in this type of account.
Bottom line on PAMM vs MAM
To sum up, in comparison with PAMM, a MAM account is more flexible and has more room for money management, from a money manager's perspective, hence this account is conjugated with more risk. PAMM in turn has lesser risks and investors have more control.
MAM, PAMM are powerful systems that allow investors to follow other successful traders to benefit from their knowledge and experience. Investors need to think about their goals, level of control, fees, and risk appetite. In other words, consider your investments carefully before making an investment decision. All of these factors are important!
So it's up to the investor which account to use, depending what are the set goals, risk tolerance and overall trading requirements.