What Are MAM Accounts In FX And How Do They Work?
- MAM is one of the most popular types of managed account types in FX trading
- When using a MAM account, you are giving the account manager access to your funds for Forex trading
- There are many MAM accounts available in the market, however, it might be a little hard to find a good MAM account manager
- Understanding the cons and pros of Forex MAM accounts is very important for successful trading
MAM Accounts Explained – How Do They Work?
Meaning of MAM Account: MAM is a type of managed account that you can use to invest in Forex trading
MAM accounts, which stand for Multi-Account Manager, are among the most popular managed account types in the Forex trading market. MAM Forex managed account is created to help traders manage multiple trading accounts using just one, single terminal.
The account is run by a manager, who is facilitating Forex trading for other investors in the market. MAM accounts in Forex are combining individual trader accounts into a large pool of managed funds and make investing in Forex trading very easy and simple for individual traders. All of the orders that are made using the master trading account are reflected on every associated MAM account according to the parameters.
These parameters are set by investors before becoming a part of the MAM account. MAM accounts are known for being very easy to use and comfortable for individual traders. Investors using this account have the option of entering orders through their trading accounts and modify the traders according to their preferences.
While people are trading with MAM accounts to automate Forex trading, this account type still leaves some control over the orders to individual investors. To use this account, individual investors are paying a predetermined performance fee, which varies from account to account.
The fee is paid to the master account trader according to his performance. In most cases, this fee is a percentage of the returns. This is an advanced type of managed account, which offers individual investors a high level of control. However, this is not the only managed account available in the Forex trading market.
There are numerous of them that traders can use. Among them are accounts like PAMM, for example, as well as LAMM. While there are many similarities between managed accounts, all of them are still different from one another, and depending on your preferences, you can choose any of them.
In most cases, managed accounts are offered by Forex brokers who are guaranteeing high-level safety standards. However, individual investors still need to make sure that they are trusting the right people.
When you are using this account for Forex trading, you are giving your funds to a person and trusting them with your trading. It is very important to make sure that you are trusting the right person while using a MAM account.
How MAM Account Works – Example
Understanding Forex MAM accounts and the way they work is a very important thing before you start using them. Multi-Account Manager is an integrated software tool, which works in a simple manner.
It gives fund managers the ability to manage multiple accounts from one, single account without the need to create an investment fund. This brings a lot of exciting opportunities to traders and increases the level of complexity as well as the potential of short-term returns with an advantage to both investor and the manager of the account.
MAM accounts can be very useful for many different types of Forex traders. For example, if you are someone who wants to invest in this market and you do not have enough time to sit in front of your computer analyzing the market, this account might be a perfect way to invest in Forex.
MAM Forex fund management for the actual trader is quite complex. The manager of the account is trading the currency pairs, which can be a huge responsibility for the team. By trading using a MAM account, you will be able to invest in the Forex market without having to trade yourself.
There are numerous MAM account managers in the market and finding them is not hard. For example, several leading FX brokers in the market offer traders the opportunity to get in touch with leading managers in the market to invest in Forex trading without doing anything but depositing funds.
Trading With MAM vs PAMM – Accounts Compared
Our guide to MAM accounts in Forex shows that many investors have a hard time understanding the major differences between MAM and PAMM accounts. While both of these are managed accounts, there are some distinct differences between them.
While PAMM accounts allocate trades based on a percentage of total equity, MAM accounts give money managers more flexibility when sub-allocating the trades placed in the master account. For example, the funds might be allocated in a fixed manner.
Unlike PAMM account managers, MAM managers can set the number of lots to be traded by each account. This offers a lot more flexibility. On the other hand, while using the PAMM account, the managers of the account are allocating the funds made with the trade according to the ratio of the initial deposit of traders.
In addition, MAM account managers are also able to assign higher leverage to certain sub-accounts, this depends on the risk tolerance of the client. Because of such flexibility, MAM accounts are among the most popular managed accounts in the Forex trading market.
For how MAM trading works, it is very important to know how the managed accounts work as well. PAMM is another very popular type of managed account, however, when compared to MAM, it is a lot less flexible.
The losses as well as profits made with PAMM fully depend on the initial deposit of traders in the managed account. When dealing with PAMM accounts, every participant has their ratio of the account balance. This way, all of the profits made during trading are divided depending on this ratio.
On the other hand, there are some similarities between the two as well. For example, when it comes to the fees, in both of the cases it is predetermined according to an agreement between a trader and account manager.
Pros And Cons Of Forex MAM Account
To make trading Forex with a MAM account explained in simpler terms, it is great to discuss its major advantages and disadvantages. As with almost everything in the Forex trading market, MAM accounts come with some pros and cons.
While many people like to use it because of how customizable it is, there also are many others who avoid using such managed accounts because it makes them feel distanced from the trading market.
So, let’s discuss the major benefits and drawbacks of using the MAM account below.
Easily Customizable – Pro
Among the biggest advantages of using a MAM account is how easily customizable it can be. In addition to percentage allocations that are offered by PAMM, the MAM account offers traders the ability to customize the trading process thanks to sub-allocations of the positions.
This means that the account managers can customize the details of the positions according to the needs of clients. For example, different amounts of leverage can be allocated to different traders according to their risk tolerance. This can make MAM a great option for those who are looking for ways to trade Forex using managed accounts.
Easy To Diversify – Pro
While talking about Forex MAM accounts, it is also very important to talk about how easy it is to diversify the trading capital. MAM accounts offer traders the ability to allocate different percentages of their funds to different trading systems. This is creating a lot of trading opportunities and can increase the potential of profits for traders.
This diversification can be a very important thing for Forex traders as it can decrease the risks of Forex trading. The more diverse the positions are, the higher chances are for avoiding the risks of the market.
Hard To View Manager Trades – Con
There are many benefits of MAM accounts in Forex, but there are also many disadvantages. One of the biggest cons of using a MAM account is that traders might have a hard time viewing manager trades.
A very important thing that traders have to do while using this account is to trust the account manager, and this can sometimes be a bit difficult. Because it is so hard to view the manager trades, some investors feel distanced from the market and feel as if their money was used in the wrong way.
Shortage Of Good MAM Accounts – Con
As much as it can be beneficial to use MAM accounts, it should also be noted that using this account might be a little hard for traders, specifically beginners. The main reason for this is that there is a huge shortage of good MAM accounts in the market.
While there are some of them available in the market, it is very important to make sure that you are trusting the one that is going to take care of your funds in a responsible manner. Finding the right MAM account is the most important step that you might have to take, and although it might sound simple, there are many things that traders should keep in mind.
Choosing a MAM Account Manager
As we have already said earlier, there is a great shortage of good MAM accounts in the market. You might easily understand how the MAM Forex account works, but finding a manager that has enough experience and expertise to handle your funds might be a bit of a challenge.
So, let’s talk about some of the most important things you should keep in mind when choosing a MAM account manager.
Equity of the MAM account manager is probably one of the most important things that you should keep in mind when choosing an account manager. This will show you exactly how much it is worthy of trusting a MAM account manager.
Equity can also be an indicator of how successful the MAM account manager is, and is a very important thing to keep in mind.
Another very important factor that you should keep in mind is the feedback that the account manager has gotten over the years. There are numerous sources you can check where people post about their experiences with account managers.
This way, you can make sure that you are trusting an account manager that has received positive feedback from the clients. User testimonials can be a great indicator that the account manager does its job with honesty, which is probably one of the most important factors in choosing the right MAM account manager.
What Did We Learn From This Forex MAM Account Guide?
MAM account is one of the most popular managed account types in the Forex trading market used by thousands of traders around the world
When using MAM accounts, you are trusting your funds to an account manager, who is trading Forex on your behalf
This is a type of trading automation, which gives you the ability to invest in the market without having to actually trade, which makes it an easy source of income
As our MAM account trading explained guide showed, there are numerous things that traders should keep in mind before choosing a MAM account manager
Common Questions On Forex MAM Accounts
What’s A MAM Account?
A MAM account is a type of managed account that offers investors the ability to earn profits from the Forex market without having to actually trade. When using this account, you are giving an account manager access to your funds. The account manager trades Forex for you, and you earn profits without virtually doing anything.
The account is very popular in the market, used by thousands of traders. However, as our Forex MAM accounts guide showed, it might be a bit challenging to find a good MAM account manager. This process can be very time-consuming, but it still is one of the best-managed account types in the market.
What Does MAM Mean In Trading?
MAM stands for Multi-Account Manager and is one of the most popular ways for people to invest in Forex trading without actually having to trade. This account gives fund managers the ability to manage multiple accounts from a single account without having to create an investment fund. The profits, as well as losses made by the account manager, are distributed among the managed accounts.