PAMM — (Percentage Allocation Master Module) is a technology allowing a client (Slave) to follow a trading strategy of another client (Master). Master operates his/her personal funds through the PAMM, and by the use of PAMM technology the Master’s trading strategy is replicated on the Slave’s account.
The funds allocated for PAMM trading remain on the Master’s or the Slave’s trading account, but are segregated from the other funds and cannot be used for trading or any purposes other than PAMM. This virtual merging of the Master’s and the Slave’s funds allows identical trading conditions to be applied to all PAMM participants.
PAMM account is beneficial for Slaves because they can benefit from Forex trading without having to do in-depth market research, trade and monitor positions themselves.
Forex PAMM is beneficial for Masters because they can trade funds many times larger than their own capital and receive a guaranteed fee for doing so. FXOpen PAMM technology is designed in such a way that both Masters and Slaves are protected from non-trading risks on each other's part.
Trader A opens a Master account via the Forex PAMM technology. With a Master's Capital worth of USD 10,000.
The Master then creates an Offer (i.e. a public proposal to other Clients to follow the strategy of the Master's account) with the following parameters: 30/5/10 - 6/4 - 10 000/1 000/100 - 10. The Master selects the Trading Interval for the master's account —1 Month.
Slave 1 and Slave 2 decide to follow the strategy of the Master. Slave 1 and Slave 2 allocate USD 25,000 and USD 15,000 respectively to be used in the PAMM account. This creates a virtual balance in the Master's Account at the start of the first Trading Interval of USD 50,000.
Pic. 1. Balance of the Master's account at the start of the first Trading Interval.
At the end of the month, as a result of the Master's successful trading, the balance in the Master's account increases to USD 75 000.
After all payments have been made according to the conditions specified in the Master's Offer, the profits to the Master and the Slaves are as follows:
- Slave 1 – USD 9,500
- Slave 2 – USD 5,700
- Master 1 – USD 9,800
Pic. 1. Balance of the Master's account at the end of the first Trading Interval.