A “percentage allocation management module” or “percentage allocation money management” (PAMM) account lets investors — who lack the time or skill — delegate trading decisions to experienced traders who execute foreign exchange (or forex) trades on their behalf.
This is our guide to choosing the best forex broker for PAMM Accounts.
Our list of the Forex Brokers for PAMM Accounts
What is a Forex Broker for PAMM Accounts?
A forex broker usually executes trades in the markets on behalf of an individual trader or investor who issues instructions to buy or sell currency pairs.
With a PAMM arrangement, there are three parties: the investor (who has the money but not the time or skill to trade it), one or more money managers (who are experienced traders that decide which currencies to trade), and the broker (which provides a platform for the other two parties to interact).
A forex broker for PAMM accounts provides this facility, but not all brokers do.
How Does a Forex Broker for PAMM Accounts Work?
A PAMM broker provides information about the available money managers, which might include their CVs, qualifications, past performances, reviews, and the amount of money managed. Investors can allocate a percentage of their trading funds to each of several money managers (hence “percentage allocation”) who place trades on their behalf, but the monetary risk is borne by the investor who also benefits if the trades go well.
Just as an investor can allocate money to several money managers, those money managers can also trade the money of several investors, thus increasing the amount of funds they can trade using their proven skills.
Key Features to Look For in a Forex Broker for PAMM Accounts
A PAMM accounts forex broker must make it easy for investors to assess and engage with money managers, and to see how their forex portfolios are progressing. Here are some specific things you should look for in a PAMM broker:
A PAMM broker must be regulated. You should be able to check a broker’s regulation status on the regulator's website.
The PAMM broker should have a clear PAMM monitoring system so that investors can monitor and track the performance of the PAMM managers.
Deposit and Withdrawal
Some brokers ask for high startup capital for PAMM accounts. This can be unattractive for investors, and hence, the PAMM managers may lose their potential customers.
PAMM account investors should be allowed to set their percentage risk tolerance so that they don’t stand to lose all of their capital at once. PAMM managers should also be able to set the required minimum risk allocation so that both sides remain safe.
A well-informed customer support team is important to resolve your concerns immediately. Great customer support shows the reliability of a broker.
Pros and Cons of Using a Forex Broker for PAMM Accounts
How to Choose the Best Forex Broker for PAMM Accounts for Me?
Having decided to become a PAMM investor or money manager, you then have to find a PAMM account broker that suits you. The main thing is the security of funds: PAMM managers want their profit share to be secure, and PAMM investors want protection against non-trading risks. You should only choose a broker that is regulated in your jurisdiction, which should ensure the broker stays compliant with the rules.
As a PAMM account trader (money manager), the broker should offer a nice user dashboard that reflects the trading performance you can share with your potential investors. The PAMM account should have an affiliate marketing option so that affiliate marketers can promote you and attract investors to you.
Since it’s not easy to find a PAMM forex broker, we’ve saved you time by doing some searching.
How to Safely Use a Broker to Make Money Online Trading?“ As a PAMM account manager, you should be well aware of risk management because this is key to making money in Forex trading. You can attract investors if you keep your risk low because investors are cautious about potential drawdowns when deciding to invest. As a PAMM account investor, you can make money if you invest in those PAMM accounts (money managers) with low risk that have been running for more than a year. Never allocate all your capital to one money manager; divide the capital into aggressive and risk-averse portfolios. ”- Mircea Vasiu
We’ve explained what PAMM accounts are and how traders and investors can benefit from them. We’ve also offered some tips for both investors and traders to make money. Most importantly, we’ve helped you choose the best forex broker for PAMM accounts.
Frequently Asked Questions
It depends on the broker. Some brokers allow even lower deposits than $100 to start a forex PAMM account.
Your funds are secure from non-trading risks if your broker is regulated, but the amount of money you win or lose depends on the skill of the money managers who trade with your money.
You can use a bank account for deposit and withdrawal, but it is not mandatory. Other payment methods are available.
You should take a look at the average monthly return of the forex PAMM account manager(s) you intend to choose.
You should allocate your capital to more than one money manager, concentrating on the ones that have low drawdowns and have been running for over a year.
You can monitor your returns from your online dashboard without downloading any special software.