When considering trading forex, there are many different types of accounts that traders might be bombarded with. Choosing from such accounts might become havoc, and if they choose the wrong one, their trading is greatly influenced by the negative impacts of the market. Therefore, choosing the right type of trading account is crucial to maintain the necessary flow of trading with ease and effortlessness. In this article, we will look at different types of managed accounts that traders can use.
What is a MAM Account?
A MAM account stands for “Multi-Account Manager” account. It’s a type of investment account where one person (called the “manager”) can manage multiple smaller investment accounts (called “sub-accounts”) on behalf of other people.
What is a LAMM Account?
A LAMM account is one in which copy trading occurs. The manager does everything, and the automated system related to the investor’s accounts copies the trades of the manager. The manager does not manage the funds of the investors. An investor considering trading with LAMM has to consider sufficient funds in their trading account to follow the manager.
What is a PAMM Account?
A PAMM account is a pooled trading account. Investors invest their capital and earn a percentage of the profit from the managers. Managers manage the funds of the investors too. The profits and losses are divided between the fund manager and the investors in the form of a percentage. That percentage is based on the amount of capital of the investors.
What Makes Them Different From Each Other?
In a MAM account, investors have more flexibility. In a PAMM account, such a thing is not there. The manager does not manage the money of investors in a MAM account, while in a PAMM account, the manager does manage the money of investors. In PAMM, the entry requirements are often relatively low as compared to a LAMM account, which demands higher entry requirements. Investors may be fined a penalty to withdraw funds before the end of the trading period in the case of PAMM, while in the case of MAM and LAMM, there is no such thing..
A MAM account, like a LAMM account, requires a higher entry threshold than a PAMM account. The profits earned on a MAM account and a LAMM account are not immediate. In the case of a PAMM account, they are immediate. Both MAM and PAMM accounts are profitable in their own ways if you know how to make the right use of them.
In summary, this article mapped out the features of PAMM, LAMM, and MAM accounts in detail. Plus, you came to understand the points that differ from each other. There are many pros and cons related to each account, and choosing the right one is crucial to trade forex easily and effortlessly. When you choose the right type of managed trading account, you have a higher chance of success in the market.