In the Forex Trading world, PAMM stands for Percentage Allocation Method Module. Forex PAMM Software is used by Forex Brokers to offer managed fund services to their trader clients.
Forex PAMM Software helps brokers to connect individual traders as investors with master traders. Master trader & individual traders allocate funds to a common pool which is ultimately allocated to Master Trader. Master Trader makes the traders using the common pool of funds.
The profits and losses are distributed among the master and individual traders as per the percentage contribution to the common fund.
Depending on the pre-agreed arrangement, Master Trader may receive a fixed management fee and commission on profits generated during a period.
How does Forex PAMM Software Work?
A forex broker that intends to offer value-added services to its clients usually goes with managed fund service. PAMM Account Service is the most popular managed fund service demanded by retail traders.
- A Forex Broker may develop PAMM Software in-house or get a white label PAMM Software from a reliable forex brokerage solution provider.
- The PAMM Software is usually integrated with Broker CRM. Forex Traders can access the PAMM Services through their Traders Room.
- A broker may use a subdomain for PAMM Service or may use an entirely different website for Managed Fund Services. But this increases the burden on traders to login on different platforms to use different services.
- It all depends on brokers but it’s advisable that everything stays within the forex CRM and traders room. It’s convenient for brokers and traders both.
- Traders need to be presented with different options of Master Traders profile with their past performance. A leader board is the best way to showcase the Master Traders.
- Individual Traders should have option to opt for PAMM Service. They choose the Master Trader who they would like to manage their funds.
- An agreement must be presented to traders before they sign up to with all the terms and conditions of PAMM services along with risks associated with managed fund services like PAMM and the fee, commission, other changes and lock-in period etc.
- Funds allocated to PAMM Account by traders are locked and cannot be used as margin for another trading etc.
- Investors usually get to see the performance of their funds in terms of percentage profits or loss. Some PAMM Software shoo the individual trades placed by Master Trader.
- PAMM Accounts usually have lock-in periods; a quarter or 3 months being the most common lock-in period.
- After the lock-in period, all the open positions are closed and profits or losses are distributed among the master and traders in proportion to their percentage in common fund pool.
- The distribution of profits or loss usually happens after the deduction of management fee, incentives in case of profits or any other charges.
- The Investors may choose to continue with existing master trader or switch.
- The cycle goes on with old investors dropping off and new investors joining in a PAMM Account.
Why do Forex Brokers Offer PAMM Accounts?
Offering PAMM Account Services for a forex broker is a tried and tested method of client retention and higher revenues.
Retail traders make the largest pool of their client base and they have a record of making losses trading forex and any other asset class for that matter.
After blowing their trading accounts few times, most retail traders live the forex trading forever. But in their hearts, they know that few traders do make money trading Forex pairs.
They try to learn from them as well but it requires a trader to be at top of their mental and psychological strength which most of us lack. And they keep losing money.
No business wants to lose a client forever.
Offering PAMM Account Services allows forex brokers to retain traders with them and opens up new opportunities for revenue by increased volume and fee.
Best PAMM Software for Forex Brokers
MetaTrader White Labels like MT4 & MT5 being the most popular trading software, there is great demand for PAMM Software specifically developed to with them. And no wonder they are the 2 best PAMM Software for Forex Brokers:
- MT4 PAMM Software for MetaTrader 4 Brokers
- MT5 PAMM Software for MetaTrader 5 Brokers
PAMM Software Cost for Forex Brokers
Standard Forex PAMM Software cost is USD 2000/month. TradeToolsFX offers PAMM Software at USD 2000/month whereas LaunchFXM’s PAMM Software price is USD 1999/month. These two forex brokerage solution providers have shown the PAMM Software cost on their website.
But there are several other turnkey forex brokerage solution providers that have developed PAMM Software.
If you are a Forex Broker and looking for Forex PAMM Software; you should contact 4-5 different vendors and get the demo as well as pricing.
A good PAMM Software is a win-win for forex brokers, traders, and pro traders. Everyone gets to benefit from it.
- Master Trader can offer their profit-making trading skills to retail traders and make money from it.
- Retail traders can make passive income by subscribing to a PAMM Account and eliminate the risk of blowing their trading account due to poor forex trading skills.
- Forex brokers get to retain their clients, increase the trading volume thereby increasing revenue.
Hope this blog served the purpose of educating forex brokers who are planning to offer managed fund services like PAMM Account to their clients.
We will share the list of the best PAMM Software Providers soon.
Please contact us for more information. Wish you success.