Using a managed account is a great choice for those with minimum trading skills or busy schedules. MAM, PAMM, and LAMM are the best options that you should know.

Thanks to the speedy technology advancement and the discovery of online trading, now practically anyone with an internet connection can participate in the forex market very easily. What makes it even better is that you don't have to be an expert to make profits in forex trading. There are many approaches available for all kinds of trading styles based on their goals, strategies, skills, and experiences. The key to success is to find the one that suits you the most.

The differences between MAM, PAMM, and LAMM

If you're a newbie or if you're too busy to manage your trade properly, one of the best options is to open a managed account on a forex broker. A managed account could prove worthwhile for your investment because it offers easy access to forex trading without having the required skill or effort. This can be a great passive income generator if you know how to do it correctly.

There are several popular types of managed accounts to choose from, namely MAM, PAMM, and LAMM. In order to know which one to choose, you need to understand the differences and the pros and cons of each option. But before that, let's take a closer look at managed accounts first.


How Managed Account Works

A managed account is basically a trading account that allows traders to hire an experienced trader or robot as the money manager to execute the trades on the account holder's behalf. The account holder would still have control over the trading account, but the money manager would have access to trade with the account holder's invested funds.

Put it simply, there are three elements of managed accounts:

  • The broker or facilitator
  • The client or the account holder
  • The money manager

In managed accounts, each player should play a different role but must work together to help the client achieve their goals. The client's job is to provide the capital needed for the trade and determine other essentials such as which expert should execute the trade, which strategy to use, and how high the risk tolerance is.

The money manager will then have permission to execute the trades based on these objectives. The client will then receive the trade's result, whether it's a profit or loss. Meanwhile, the broker's job is to facilitate the trade, provide the platform, and connect the client with the expert.

In short, managed accounts provide a way to earn money from forex trading without having to actually be present and trade with our own hands. Keep in mind that apart from funding the trade, the client should also pay a fee to the money manager and the broker for facilitating the trade.



Percent Allocation Management Module (PAMM) is a type of managed account that distributes gains, losses, and fees to each investor's accounts. As the name suggests, the amount of the distribution is based on each client's allocation percentage. That being said, the investor's portfolio is highly dependent on the size and performance of the trade.

For example, let's say the total sum of the trade is 100 lot. This amount is then divided among the individual investors into smaller trades based on the percentage of equity of each investor's account in relation to the main account. If the size of an investor's account is equal to 20% of the main account's balance, then the size of this investor's trade is 20 lot (20% of 100 lot). The amount of profit, loss, and fee will also be distributed according to this number.

Basically, the clients' managed accounts are all connected to the money manager's main account and all trades made by the money manager are shown proportionally in the clients' accounts. In other words, the main account's balance represents the total sum of all clients' deposits. But for safety reasons, the client's deposits remain in their own trading account.

The money manager won't have access to these accounts and therefore won't be able to make withdrawals. However, the fees for the managers will be withdrawn automatically from clients' accounts once the trade is finished. In some PAMM accounts, the manager is even required to participate in the trade as well. The manager's income will also be allocated according to the ratio of the trade.

There are several advantages that come with PAMM accounts. First, PAMM offers flexibility for the investor to use several trading systems at once. This means investors can diversify their portfolio by allocating a percentage of his/her account to one or more managers. They can also use this feature to hedge against any losses that might occur from certain money managers.

Other than that, many traders prefer PAMM due to the wide range of professional managers available in various forex brokers. The list of candidates is usually displayed publicly along with their track records and skills. Lastly, in PAMM accounts, traders are usually allowed to monitor their trades in real-time, which gives them more control over their investment and increases transparency.



LAMM stands for Lot Allocation Management Module. This type of account can be considered as the predecessor of PAMM since it does not work based on the percentage of the investor's equity percentage on the manager's account. Instead, by using a LAMM account, the client can determine the number of lots that will be traded so they will get the profits or losses according to this number.

The investment system of LAMM is actually not much different from PAMM. First of all, the investor should connect his/her account to the LAMM manager account. After that, the manager will trade on his account with his own funds. Then, the transactions made by the manager will be copied automatically into the investor's account, so that the investor can get the same profitability as the manager.

This is quite beneficial if the trader's lot size is the same as the manager's. However, please note that if the investor's portfolio is larger than the manager's, the risk of losing money is also much greater.


3. MAM

Multi-Account Manager (MAM) is often said to be the combination of PAMM and LAMM because it uses the percentage allocation method like PAMM, but it provides higher flexibility for the money manager to adjust the risks and allocate the funds.

For instance, the money manager can allocate trades with fixed lots. This means the manager can set the lot size for each investor, according to the client's account and risk profile. This fixed allocation can be done with a LAMM account, which allows the manager to manage lot sizes in the sub-accounts manually. Apart from that, the manager can also assign higher leverage to certain sub-accounts depending on the client's risk tolerance.


Why Use Managed Accounts?

Managed accounts offer various benefits with a relatively high degree of safety for the investor. Since there are several account types that investors can choose, it's easier to calculate the risks and determine which one is the most suitable.

Investors can choose the money manager that will execute the trade for them, so it's important to evaluate the candidates very thoroughly before trusting them. Investors can also enter and exit the program at any time they desire without any limitations, so they can pull out if they are not comfortable with the trading performance of a particular money manager.

For further safety, the manager won't have access to the investor's account directly. The invested funds will be kept in the investor's account so the manager won't be able to withdraw without permission. Other than safety, managed accounts also offer flexibility and ease in trading. The process is very simple, so even a beginner can manage to do it.

On the other hand, managed accounts can also generate considerable income for the money manager as well. They can use the investors' funds to trade as if they are in one large position, thereby increasing the chance of making consistent profit. The more successful trades they make, the higher the fees that they will receive.


Final Thoughts

Being successful in forex trading is certainly not as easy as it looks. Many factors play a role in it, including hard work, patience, skill, experience, and more. Many people have spent years developing their strategies and even so, not all of them succeed in the end.

Managing your trades can be a full-time job on its own, so not everyone has the time or determination to quit their 9-to-5 career and choose the uncertainty of forex trading. Managed accounts can be an excellent solution for those who don't want to face a lot of trials and errors, or those who don't want to spend a lot of time looking at price charts and indicators.

However, even using managed accounts is not the perfect, risk-free trading method that everyone seeks. We should not forget that the value of foreign currencies changes all the time and the money managers are regular human beings with flaws and emotions.

Thus, it's actually very possible to lose money from these investments if you're not careful. You can improve your chances and minimize the risk by investing in highly-experienced money managers, but the fees might be higher.


After all,  you need to use the knowledge to build your portfolio and the best money managers for your trades. Despite the pro and cons of managed accounts, it's not wise to fully rely on them without learning anything about forex trading.