When you go for forex trading, opening a
trading account is the first thing you need to focus on. However, you will find
different options while opening a real account. Normally, the retail forex
traders initiate trading by themselves, but there are some retail and
institutional traders who trade via the money managers, which includes PAMM
account, MAM account, and LAMM account.
From the names, you might not know the
differences among those accounts. But each of these accounts contains some
noteworthy differences.
In this article, we will take you through the
basics of each account type for a better understanding.
MAM Account
Multi-Account Manager gives the option to trade
multiple trading accounts via a terminal. Normally, MAM account brokers
put the different single-user accounts into a large account.
It follows a simple working procedure. Usually,
the manager completes the orders from the master account, which take effect on
all the individual accounts. However, investors are also allowed to place their
own orders, and they can modify the trades placed by the manager. The main
trader or the master trader will charge a performance fee as their
commission.
PAMM Account
The percentage allocation management module
allows the trader or investors to distribute the money or the investment. The
investor can choose the money manager or appoint a qualified trader who will
initiate the trading on behalf of the investor. The appointed manager’s aim is
to bring profit for the investor. However, any kind of losses or profits
normally gets distributed to other individual accounts associated with the PAMM account.
The manager in PAMM holds a single master
account that is connected to all the associated sub-accounts. But you will
certainly have access to your account and can observe your account. You can see
everything on your account, but you don’t get to do anything inside your sub-account.
LAMM Account
In the Lot Allocation Management Module,
traders usually select the amount they want to trade. Normally, the multiple of
the lots invested in the market is used to calculate the profit and losses.
The LAMM account brokers work like the
MAM accounts. But, LAMM uses a large account, and it is ultimately reducing the
risks. Normally, LAMM is beneficial in the case of liquidity. We know that
investors always try to ensure the liquidity before ordering on forex, and LAMM
makes sure the liquidity first.
Reasons Behind Trading with Managed Account
Managed accounts usually ensure the safety of
your fund first. Besides, they also work on transparency as well as controlling
your money. You can trade via a managed account through a simple procedure. You
just need to deposit the desired amount to the account and then use the desired
account type to continue with your trading. Moreover, you don’t need to worry
about the trading plan and strategy. Your only task is depositing the
investment and taking the profit or sharing the loss.
Conclusion
Managed accounts are idle for the investors who
have a significant amount of idle money. If you are one of those kinds of
investors, you can easily use the managed account to make some profit out of
your idle money. So, this article might be useful for you to decide the managed
account you need.
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