The question of what is a PAMM account? Can come up at any stage of your forex trading journey.
It is likely though that you are considering opening a PAMM or other type of forex managed account. That’s great, but you are likely needing more information on the subject.
This is exactly what we will provide. Along with not only a list of the best PAMM Forex Brokers, we will guide you on the finer details of PAMM accounts, and how to get started with one.
Let’s take a closer look below.
Table of contents
What is a PAMM Account?
PAMM stands for Percentage Allocation Money Management and this account is a type of managed account under which investors can allocate funds in proportion to a fund manager.
These fund managers may manage many investors’ funds at the same time, and the overall aim is that the fund managers will trade and generate a profit that can then be redistributed to investors automatically.
Who is involved in PAMM Accounts?
There are basically three parties involved when it comes to PAMM Accounts. These are, the forex broker who provides this type of account and facilitates trading to take place, the fund manager who is the person doing the trading, and the investor who is providing the funds with which to trade.
Here is a closer look at how each is involved in the process:
The forex broker
The broker is of course key. They provide the entire trading infrastructure like the trading platform as well as the account type itself. This helps both you as an investor, and the fund managers, to trade with safe and well-regulated environments including things such as deposits, withdrawals, and other features that generally assist the process.
The fund manager
The fund manager is, of course, the person doing the actual trading on your behalf. They will only have access to the funds which have been authorized and allocated to them and they cannot withdraw investor funds.
They do have discretion though when it comes to accepting or declining new investors, and can often set their own commission and minimum deposit levels depending on broker policy.
The investor in a PAMM account typically gives up control of trading activities to the fund manager, though they still control their account and can decide whether to allocate funds to a manager or not, and if they do, then how much is allocated.
They will also have the discretion to invest in more than one PAMM account manager at any particular time.
How to choose a fund manager
Most of the top brokers provide a transparent and informative environment for you to select from a variety of fund managers. This could involve the ability to interact directly, or more likely, comprehensive details about the strategies and past performance of each fund manager.
This allows you the opportunity to select a proven fund manager with a style and record that is a good fit for your trading objectives and risk attitude.
Reading our guide on how forex managed accounts work is a great idea to get to know all aspects involved in making your choice.
Is a PAMM Account safe?
PAMM accounts are entirely safe and legitimate. Of course, you will want to make sure you are dealing with a well-regulated broker, but, if you are, then PAMM accounts are perfectly above board.
Legally, the relationship between managers and investors is regulated by a document known as a Limited Power of Attorney (LPOA). This helps ensure everything is completely safe and transparent.
You can go into more detail on this with our guide on, are PAMM Accounts safe?
Find a forex broker to PAMM Trade With
When choosing a broker to open your PAMM account with, the first and likely most important thing for you to do is make sure they are a well-regulated broker. This will give you access to a trusted and secure trading environment.
The other key point is to make sure they offer a PAMM account option since not all brokers have one available.
To help you choose, we have prepared a collection of the best PAMM forex brokers that you should take a look at.
What is PAMM Account FAQ
How Do Forex PAMM accounts work?
PAMM accounts lets you participate in the forex market without having to worry about trading. All you have to do is to look for a fund manager who is a professional trader to trade on your behalf and rely on his/her skills.
These accounts allocate certain percentages of your funds to these managers to trade with, and you get returns proportionate to your investment and the profit made by the fund managers.
Are PAMM accounts safe?
PAMM accounts are safe as long as you open a trading account with a safe and regulated broker. The rest is up to the skill of the manager you decide to invest on. This is the reason why you should be careful and research who you invest in.
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