Best PAMM Accounts 2021

Brokers with PAMM accounts provide investors with the opportunity to earn returns on their funds without executing trades themselves. Money managers can trade forex using funds from multiple accounts, sharing the profits or losses among investors. In this article, we review the definition of a PAMM account as well as the benefits and drawbacks. We also provide a step-by-step guide to finding the best PAMM brokers and opening an account.

Best PAMM Account Brokers

LQDFX offers online trading with multiple STP accounts and MT4 analysis tools.

What Is A PAMM Account?

PAMM stands for Percentage Allocated Money Manager and allows investors to allocate funds to account (money) managers, which can then be traded from one master account. The PAMM system is predominantly used in forex, providing investors with the opportunity to profit from trading, without needing to carry out technical analysis or take positions themselves.

However, it isn’t just forex that can be traded using PAMM accounts, with brokers such as Alpari offering PAMM accounts for cryptos including Bitcoin.

How PAMM Accounts Work

PAMM is the name given to the technology that allows money managers to trade funds pooled from different accounts, called sub-accounts. A money manager will advertise their services including their performance history, as well as the conditions of the account such as any commission, which will be charged if the trade is profitable. The money manager will also invest their own funds in the account, meaning there is an additional incentive for them to trade responsibly.

How PAMM accounts work

Investors sign up with a ‘Limited Power of Attorney’ (LOPA), which is an agreement to take on the trading risk until the end of the term. At the end of the term, investors can choose to cash out, carry on investing with the money manager, or move their funds to a different provider.

Forex PAMM accounts are opened through trading companies, providing transparency and security for the investor if a well-regulated broker is selected. However, this does not provide protection against any losses that might be incurred through the account manager’s trading decisions.

MAM Vs PAMM Account

Brokers with PAMM accounts split profits or losses among investors as a proportion of their initial deposit, minus any commission fees. Multi-Account Management (MAM) is a flexible derivative of PAMM that allows trades to be allocated in a non-proportional way. This means some investors can choose to take on more risk, for example by using leverage, resulting in different returns for investors of the same money manager.

Benefits Of PAMM Accounts

There are several advantages to selecting a broker with a PAMM account:

  • PAMM accounts enable investors to profit from trading without monitoring markets and carrying out analysis themselves.
  • The trade can easily be executed on one system, without complicated accounting when using funds from different sources.
  • The money manager will often be experienced in trading, increasing the likelihood of generating a profitable return.
  • The account manager has to invest their own funds into the account and only receives commission when the trade is profitable, providing an incentive for them to trade to the best of their ability.
  • Investors can select from a wide range of money managers and can spread funds across multiple money managers to diversify their portfolio.
  • Brokers act as a guarantor, preventing the money manager from withdrawing the funds, as well as acting as an independent body to provide statistics and performance history of different PAMM accounts.

Risks Of PAMM Accounts

Opening a PAMM account also comes with some disadvantages:

  • As with all trading, there is a risk of losing capital, which is dependent on the money manager’s decisions and cannot be influenced by the investor.
  • Often there isn’t enough information available to study a money manager’s trading strategy in detail.

What To Look For In A PAMM Broker

Here we list the things to consider when selecting a PAMM broker to open an account with.

Account Requirements

PAMM managed forex accounts are likely to be subject to conditions such as minimum deposit requirements and limits on the number of trading accounts. For example, Tickmill is a broker that targets professional investors with a minimum deposit requirement of $5,000. For investors looking to risk a smaller amount of capital, the cent account offered by FXTM is a good option, as it measures in Cents rather than USD.

Some brokers with PAMM forex accounts also come with base currency requirements. Dukascopy is a popular PAMM broker that allows a choice of base currency, regardless of the account managers trading strategy, as well as providing the option to open a demo PAMM account.

Many brokers also have restrictions on where customers can trade from. ATC Brokers is an option for residents of the USA looking to open a PAMM account, while Pepperstone and IG are good choices for customers located in India.

However, while these requirements may deter some customers, some PAMM accounts also offer incentives to sign up, such as forex bonus deals.

Software

Although it is the account manager who will be trading, having superior tools will increase the likelihood of them executing a successful trade. FXOpen is an example of a broker that offers three PAMM account types: STP, ECN and Crypto, each of which comes with different leverage options and commissions.

Check the underlying software and platform offered by the broker, which will determine the order types available as well as the trading execution process and speed. AxiTrader and Avatrade offer the MetaTrader 4 platform and therefore all MT4 normal and unique order types.

Other important features include the ability to monitor trading performance in real-time, as offered by the Oanda PAMM solution, FXManager. Risk management is also essential when trading, so look for accounts that come with the ability to set stop-loss orders.

Oanda PAMM accounts
Oanda FXManager Client Window

Regulation

Using a regulated broker is highly recommended when opening a PAMM account. For investors located in the UK and Australia, IG and Pepperstone are popular providers regulated by the Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC). As funds up to £85,000 invested in FCA regulated brokers are protected by the Financial Services Compensation Scheme (FSCS), traders are protected against scenarios such as liquidation of the broker. Alternative brokers include FCA regulated Vantage FX or ADSS.

While LQDFX claims to be a leader among brokers with PAMM accounts, it is not regulated and is therefore not a recommended choice.

Money Manager

Ultimately the most influential factor on profit or loss is the money manager that will be carrying out the trades. Review the money manager’s forex strategy, past performance, commission fees and rating to gain confidence about which account to invest in. Also consider the age of the account, as older accounts with good performance are more credible.

FXPrimus and InstaForex are examples of brokers with PAMM accounts that are highly transparent about trading performance and fees. They also both receive positive reviews online.

FXPrimus best forex PAMM systems
FXPrimus Best PAMM Account Performance Table

Final Word On Brokers With PAMM Accounts

PAMM accounts enable straightforward execution of trades using funds from different accounts, thereby permitting money managers to carry out forex trading on behalf of multiple investors. This offers several advantages including the ability for investors to earn without monitoring markets and carrying out technical analysis themselves. However, PAMM accounts are exposed to the same risks as when trading individually, meaning risk management is still essential.

FAQs

What Is A PAMM Account?

A PAMM account is predominantly used in forex trading and allows investors to allocate funds to money managers, who trade the investments from one master account. This provides investors with the opportunity to profit from trading, without needing to carry out technical market analysis or execute the trades themselves.

What Is A PAMM Broker?

A PAMM broker provides investors and money managers with the opportunity to open a live account to facilitate trading. When adequately regulated, the broker provides security and acts as an independent body to advertise the past performance of money managers.

Which Brokers Offer PAMM Accounts?

Some of the most popular brokers offering PAMM accounts include Pepperstone, IC Markets, IG, Alpari and HotForex. Unfortunately, eToro, Interactive Brokers, XM and Tradersway do not yet offer PAMM accounts.

How To Become a PAMM Account Manager?

To start a PAMM account, sign up with a broker and login to place an initial deposit into your master account. Some brokers will have additional requirements such as a minimum number of investors in a pool before trading can begin.

What Are The Best PAMM Account Managers?

IC Markets and Pepperstone offer numerous reputable PAMM accounts. However, the past performance, rating and fees for each PAMM account should be studied to determine the best account manager for the individual investor. Check out our list and reviews to get started.