Best PAMM Forex Brokers for 2023

Who is a PAMM Forex Broker?

A PAMM forex broker is a brokerage platform that offers the passive investment model in forex that is known as the Percentage Allocation Management Module (PAMM). This is essentially a fund management system in forex which requires that the managing partner has a vested interest in the fund being managed. Essentially a PAMM account is setup by an individual who must generate sufficient profitable trading history. Based on this history, this individual can use the PAMM forex broker’s engine to make a call to other investors that have the funds but not the time or the skills to trade, to contribute money to a pooled fund for a share of any profits that accrue from the fund after a trading cycle is completed. All pooled funds are usually managed from a single PAMM account.

Profits and losses are shared in the same percentage as the pooled fund contributions from all investors. In addition, the manager of the fund (i.e. the one who trades the PAMM account actively) is entitled to a performance fee payment from every investor in the PAMM account fund.

How Does a PAMM System Work?

The PAMM system begins with the active trader that opens the PAMM account, commonly referred to as the Master or the Manager on many PAMM account broker platforms. The Manager will first assign some capital and commit it to a trading process for a period of time, to show consistency and profitability.

Once some profit history has been generated, the Manager will put out a proposal inviting investors to place funds with the PAMM account to benefit from his/her trading strategies. Payment cycles are decided, ratios are apportioned according to the equity stake of each investor in the fund, and the compensation of the Manager from each investor’s profits is also decided. These are all referred to as the Offer Parameters. Once the offer parameters are all settled, trading can begin.

What to Look For in a PAMM Forex Broker

Just as is the case with copy trading, there will usually be a lot of traders who advertise their services as potential managers of PAMM accounts. However, only few will be suitable PAMM managers. Therefore, a PAMM forex broker should be able to provide a solid ranking system that will enable investors to seek out the most suitable PAMM account managers for their business. The PAMM forex broker should also be able to provide a system that effectively ranks the performances of traders seeking to manage PAMM accounts.

A) Account Rankings

The PAMM Account Ranking refers to the systems used by PAMM forex brokers to rate the performance of active PAMM accounts. The rating system is usually based on performance over time. Ratings will display the best performing PAMM accounts, usually in descending order. Parameters that are used in the ranking system include the following:

• Total percentage gain on the PAMM account as at the time of viewing.
• The daily percentage gain/loss, which is usually calculated from the previous day’s profits or losses.
• Duration that the account has been in operation.
• Maximum drawdown percentage, which is the maximum loss (realized or unrealized) that the account has been made to face during the course of trading.
• Performance chart, which shows the performance of the PAMM account in graphical format. This chart is especially important as it shows the risk profile that the PAMM account manager is trading with, as well as the consistency of performance.
• Rate or return, which is the ratio of realized/unrealized profits or losses to the allocated capital.

The ranking of the best Managers is not static, but changes according to performance changes.

B) Follower Rankings

For a potential PAMM investor, it is not enough to have the trade data mentioned above from the PAMM account. You would also want to know how investors are doing with various PAMM accounts. Therefore, a PAMM forex broker should be able to display the following information for PAMM investors:

• The date that the investor joined the PAMM account.
• The percentage gain/loss sustained by the investors
• The performance charts for investors following a particular PAMM account.

Depending on the PAMM forex broker, there may be provisions for more comprehensive analysis of PAMM accounts which will allow potential investors to get all the information that they need to make an informed choice.

Another aspect of the PAMM account system is the referral system, which allows those who refer investors to the PAMM forex brokerage system to earn from their affiliate work. Not all PAMM forex brokers will offer an affiliate system for this facility.

Other PAMM Forex Broker Responsibilities

As the PAMM account system brings together different people who hardly know each other on a personal basis and therefore can make no guarantees on the honesty or trustworthiness of one other, it is the responsibility of PAMM forex brokers to ensure the safety and security of funds of all participants. Therefore, PAMM forex brokers generally have the following rules in place:

1. The Managers have no power to withdraw funds from the PAMM account once the system is in place. Only when agreements have been reached to dissolve the arrangement can the Manager and other investors each get their money individually.
2. Payment of performance fees for Managers as well as profit/loss distribution to all investors are performed automatically by the PAMM forex brokers. Neither the Manager nor the investors can perform this function. This function is done in a timely fashion, so that no one has to chase the other for payment of any profits or performance fees.
3. The Investors retain the right to assign and revoke funds to the PAMM account system. The Investors also reserve the right to make offers to the Managers with their own parameters.
4. The selection process by which Investors choose Managers is made as simple and as transparent as possible via the provision of a comprehensive rating system.
5. Performance charts can provide at a glance, critical information such as the risk setting and consistency of performance of a PAMM account. These charts are updated using specialized algorithms.
6. All records are publicly available and can be viewed and confirmed by all vested parties.

The list above shows a catalogue of PAMM forex brokers that we have assessed and found suitable for use by our readers. They are suitable for traders who want to become Managers of the pooled funds and also great for Investors who are looking for where they can get allocated returns in a safe and transparent setting. Are you an affiliate looking for how to earn from referring Investors to the system? Some of these brokers provide affiliate payouts for PAMM account referrals as well.

This is a service that has the potential to benefit you in three ways. Feel free to make a choice from the PAMM forex brokers that are listed above and enjoy the best that percentage allocated money management has to offer.