Best PAMM Brokers & Cautions

PAMM feature imageTrading

The Best PAMM Services List

PAMM account is provided by Brokers (mainly Forex Brokers). In order to invest in PAMM, you need to go through the 2 stages of;

  • 1) Select the brokers offering PAMM account
  • 2) Select the specific PAMM account(s) traded by each money manager

1) PAMM Service Broker Selection

There are several PAMM service brokers, and one of the most convenient ways to search the best service is to use myfxbook PAMM broker list, which shows the ranking based on the overall scores;

PAMM myfx broker list

The Highest Score Forex PAMM Service Broker

Among the list, the PAMM service that achieved the highest score is FXOpen, being regulated by the Financial Conduct Authority (FCA) in the UK.

Means your money is segregated & basically safe.

2) PAMM Account (Money Manager) Selection

Once you select the PAMM broker, you need to choose the specific PAMM account managed by each money manager (trader).

For FXOpen PAMM account, they list PAMM Account Rating like below;

PAMM FX Open ListWhen you select the money manager, don’t forget to go through PAMM Investment – 7 Secrets To Find The Best Money Manager.

You may want to take advantage of FXOpen NDB (No Deposit Bonus) If you’re interested.

 

PAMM Broker Selection Cautions

Regulated Broker

Although PAMM service structure is a Ponzi Free means the account is under your name and money manager can’t withdraw your account.

However, it’s not a Broker Fraud / Bankruptcy Free. 

It’s safer to use the regulated broker with a clean record. 

Alpari Caution

Although Alpari collected the highest votes in the above myfxbook list, Alpari (UK) Limited actually went into insolvency caused by the SNB (Swiss National Bank) & subsequent SAR (Special Administration Regime),  the company’s US NFA membership was revoked, preventing them from offering their services in the United States.

Alpari International claims they are regulated by FSC Mauritius. Alpari Research & Analysis Limited, which shows a London address though it provides only research and analysis and is not licensed to trade. However, accept UK Traders (in fact I myself could register and trade freely), and they keep sending me the newsletter.

Whatever loophole they use, it’s the fact that they are not licensed to trade in the UK and surely they are not regulated by FCA thus your fund will not be protected by FSCS.

So if any bad thing happens, you have a large risk of not recovering your money. Therefore, we strongly suggest you keep away from Alpari.

Verified Historical Performance

It’s absolutely essential for you to select the PAMM account of its historical performance is publicized & verified by the 3rd party.

IC Markets

IC Markets is a regulated broker that offers MAM/PAMM service like below;

ic markets broker pamm page

However, they don’t disclose the MAM/PAMM account records publicly. One of our members sent us the answer from IC Markets regarding this point as follows;

With some web research, you are able to find more information on IC Markets Managed Accounts and Money Managers operating with us. IC Markets cannot provide performance information on our Money Managers. The Manager can be contacted directly and a request can be made to him for performance history.

Unfortunately we are not able to provide a list of Money Managers running a MAM with IC Markets. This is our company’s policy as we do not offer investment advice.

We are puzzled by their comment on the interpretation of the account’s historical record into investment advice. Obviously, it’s not an encouraging policy and going further is not recommendable.

 

What’s PAMM All About?

For those who are not familiar with Forex PAMM broker service, let me quickly explain it.

PAMM (Percentage Allocation Management Module) is a new technological solution allowing the trader on one trading platform to manage the simultaneously unlimited quantity of managed accounts.

Depending on the size of the deposit each managed account has its own ratio in PAMM.

PAMM Broker Contract – LPOA

PAMM is actually a software application, which is primarily used by foreign exchange (Forex) brokers to allow their customers to attach cash to a particular trader managing one or more accounts, appointed on the base of restricted legal powers a.k.a. Limited Power Of Attorney (LPOA) such as below image;Finfx Power Of Attorney

The PAMM solution enables the trader to handle infinite amounts of managed accounts concurrently on one trading platform. Each managed account has its own PAMM ratio, depending on the amount of the payment.

The outcomes of trade activities (commerce, profit and loss) are assigned according to the proportion between the managed accounts.

How PAMM Works

A money manager trades on his PAMM account using his private assets ($300) as well as his investors ‘ funds ($100 from Client 1 / $60 from Client 2 / $40 from Client 3) in the below example.

As said in the previous section, this money manager & 3 clients are contracted through the POA. The money manager can trade the clients’ fund but can’t withdraw it.

If the manager in the graph above continues to trade on his PAMM account using their private assets as well as their investors ‘ funds.

The better their place in the rating outcomes from the trading of the manager.

PAMM account structure 1st explanation image

 

The quantity of money on the PAMM account rises if the manager earns a profit and the profit is spread between the manager and the shareholders depending on the number of their original assets.

If the profit produced 200% and the balance of the account had increased to $1,500 in our instance, the new fund balance for the manager & each client would be as below;

PAMM account structure 2nd explanation image

 

In compensation, the investors pay the manager some of their profit specified in LPOA. In this example, the compensation of the manager is 50% of the profit of the investor as below;

PAMM account structure 3rd explanation image

 

 

PAMM, LAMM & MAM Account

Forex PAMM MAM LAMM

There are few other software featuring more or less the same function as PAMM, such as LAMM & MAM, see the brief description of each 3 software as follows;

PAMM (Percentage Allocation Management Module) distributes gains, losses and fees on an equal percentage basis. In this way, all accounts regardless of size obtain the same percentage returns.
LAMM (Lot Allocation Management Module) allows the trader to allocate different trade lots to each investor’s account. This grants the trader the flexibility to use different leverages for different types of investors.
MAM (Multi-Account Manager) is a combination of the features found in a PAMM and LAMM and offers more flexibility to the trader managing investor accounts.
 
 

Best PAMM Broker Wrap Up

Some Forex brokers provide a platform where money managers offer their PAMM (Percentage Allocation Management Module) to you.

In short, PAMM is a Collective Fund meaning it’s a Managed Account or a sort of mini-version of a mutual fund for mainly Forex trading. You choose the specific PAMM account to generate profits for a predetermined commission.

  • 2 Process to Select The Best PAMM Account  – Firstly broker and secondary specific PAMM account. Don’t use the broker that doesn’t publicize each account’s historical record and when it comes to the selection of PAMM account check the 7 criteria. 
  • Safety – It’s a collective fund but the trader can’t withdraw your money but only trading in the broker, so your money is basically scam-free. However, not broker poor-management free, so use a regulated broker.

 

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Good Luck!!

Joshua Walker (bio)

Editor – Global Extra Money (GEM)

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