What is FXPrimus PAMM?
FXPRIMUS’ PAMM gives traders like you the ability to automatically execute the positions opened by successful traders like Micron Investments, called PAMM Masters, and leave the rest to them!
Simply put, “PAMM” stands for “percentage allocation management module” or “percentage allocation money management”. In other words, a PAMM account is basically a managed account where one trader trades on behalf of others through his or her account. PAMM accounts work by the Forex brokerage using a software application which allows the brokerage’s clients the ability to assign part or all their account to be managed by a particular trader, this case Micron Investment Ltd. The managing trader then trades his own money but piggybacked onto that is the money of other clients (you), who each receive a percentage share of the profits or losses made by the trader into their own accounts.
How Does it Work?
The broker provides a Limited Power of Attorney (LPOA) document which both parties sign which gives the money manager (Micron) the right to manage the investor’s money under agreed terms and conditions: the investors (you) may of course terminate it at any time and have control of the trading of their funds transferred back to them. Monitoring, review, record keeping, etc. is all facilitated by the brokerage (FXPrimus) offering the PAMM account.
Let’s say that Micron Investments Ltd. has $100,000 in their PAMM account. Micron has $10,000 of their own capital in the account, Trader A (you) gives Micron Investments Ltd. $40,000 to manage, Trader B gives Micron Investments Ltd. $30,000 to manage, and Trader C puts $20,000 in the PAMM account. Micron is now trading a total of $100,000 with Microns' percentage allocation being 10%. Trader A’s (you) allocation will be 40%, Trader B will be allocated 30% and Trader C has 20% allocated in line with the percentage contributed to the total fund by each trader. Micron puts in an order to buy 1 full lot of EUR/USD. Your broker will allocate the order between the parties for this trade as follows: 0.1 lot to Micron, 0.4 lots to Trader A, 0.3 lots to Trader B and 0.2 lots to Trader C. Let's say the trade made a 20% gain. The illustration below will showcase how the profits are distributed based on the percentage contributed by each trader.
Advantages of PAMM Account
The PAMM software makes all the required calculations. Also note that there is effectively no limit to the number of “clients” Micron can manage money for. Micron can profit from their own trading and take a percentage of the profits from the money we manage as well. When the trading goes well and is profitable, it is a win-win all round.
One special advantage that a PAMM account has for the investor (you) is that the investor knows that Micron is risking our own funds, and has “skin in the game”, which would tend to increase confidence that Micron will be working in the style they truly believe in, to the very best of their ability.
PAMM accounts are policed by the broker, and investors (you) have peace of mind as they know that the money manager (Micron) has no power to access the actual funds contributed as a withdrawal from the brokerage. Contrast this with a situation where the investor must write a check and hand it over to a money manager, and you’ll instantly see a big advantage of a PAMM account.
Who is FXPrimus?
FXPRIMUS is one of the most secure online trading environments available anywhere in the forex industry. Our extra measures in safety have positioned us as the front runner in responsible trading, and we are now setting new standards in safety amongst our counterparts in the FX industry.
FXPrimus does not offer its services to residents of certain countries/jurisdictions including, but not limited to, Australia, Belgium, France, Iran, Japan, North Korea and USA. The Company holds the right to alter the above lists of countries at its own discretion.