Many of you are familiar with well-known PAMM and today I’d like to tell a little bit about the concept of LAMM. I’ll briefly describe you the essence of each one and the cases of their use.
To begin with let us recall the abbreviation inherent in the names of these concepts:
PAMM – Percentage Allocation Management Module
LAMM – Lot Allocation Management Module
For reference, the lot on Forex is the measure of currency volumes. A standard lot is usually equal to 100,000 units of basic currency (i. e, if you purchase two EUR / USD lots, your sum is equal to $ 200,000). In addition, there is also the concept of a mini lot (0.1 lot = 10,000 units of basic currency) and a micro lot (0.01 lot = 1,000 units of basic currency). The lot size at the opening position is very important because it determines the extent of risk, profit and loss on the transaction.
So, what’s the difference between the schemes of work of both modules?
Let’s take a quick look. PAMM system, as we know, represents only one common (for the traders and the investors) account into which merges all the money of depositors, thus, it appears that the manager works at the market with a huge deposit. Profit or loss brought by his strategy increase or decrease the deposit of each investor in proportion to his own size. The interest distribution of gains / losses takes place.
LAMM accounts work differently. This system consists of one account of the manager and dozens / hundreds / thousands of individual accounts of the investors. The manager trades on his personal account and all transactions (both profitable and unprofitable), meanwhile, are manifested on the accounts of the investors.
Here not shared interest but lots are distributed. The trader operates them on his account, thus, the transactions carried out by managers are automatically copied on each investors’ account. The results of this trade are determined by the profitability of these transactions.
I’ll systematize the differences in the following way:
– How does it work?
PAMM: participating interest (from all accounts) with the corresponding interest distribution of profit / loss depending on the success of the manager
LAMM: the transactions of the manager are copied on the accounts of the investors depending on the budget
– How is the trade conducted?
On PAMM – from a single account
On LAMM – only from a personal account of the manager
PAMM – just at the time of rollover
LAMM – at any time
– Distribution of profit / loss
PAMM – in the end of the trading period or at the time of rollover (upon closure of the managed accounts)
LAMM – in the end of the trading interval (see the terms of the offer)
– Minimum deposit:
PAMM – $ 1
LAMM – depending on the amount of the manager’s capital (usually bigger than in PAMM)
Disadvantages of LAMM
– high minimum deposit (if you have not enough of money on your account for the transaction, the transaction will not be copied on your account)
– you do not have the access to control your account (the manager is not concerned about the calculation of the safe amount of transactions, deposit, etc. He works with his capital only and circulates the money for his own profit)
Disadvantages of PAMM
– instability of the account (if unexpected withdrawal of large amounts of money happens, the manager may have not enough money to hold the position, the transaction will be forcibly closed and the trader, along with the investors will suffer serious losses)
– withdrawal is possible only in rollover (once or twice a week, or once in a month – depending on the terms of the offer. The only exception is Alpari, where the money can be displayed daily, but at certain times)
That’s all. I find PAMM platform more comfortable, as for LAMM, it depends on the person; it is sooner more convenient springboard for the manager than for the average investor. Well, all is up to you. Here is the list of the main platforms sorted by PAMM and LAMM criteria.
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