PAMM stands for Percentage Allocation Management Module, also known as Percentage Allocation Money Management. PAMM system is mostly used in forex market. In this market, the PAMM system brings together investors and traders into one special system that enables the investors to use skill of the traders, and the traders manage funds and make profit. Their job is to handle unlimited number of managed accounts. Investors may place a various size of deposits into certain accounts. This will make each account has its own ratio in the PAMM system. Based on this ratio, all activity results of the traders are apportioned. The PAMM system makes it possible for traders to receive funds from other traders or put funds in other trading accounts and have a portion among them.
A PAMM account is a form of trust management. A brokerage company is the one who manage all activities within the system. Thus, it must ensure the same value of rigths between all traders and make it possible for the system users to draw back their portion from the project. At the end of a trading period, investors will get profit and traders will get their commision as stated in the agreement.
There are two different PAMM accounts. They are PAMM investor accounts and PAMM trader accounts. Investors transfer funds to the PAMM trader accounts, and traders receive funds from the PAMM investor accounts. Every member of a brokerage company are free to register unlimited trading accounts. Here, investors meet the very important feature which make them have the possibility to diversify risks putting money in different PAMM accounts.
One of the brokerage company provides a great service that make it possible for traders to receive funds from different investors in one account. This company supervises and records all the activities within the PAMM system. This is to ensure transparency and safety to all its members.