Taking the right decision is just one side of the coin for successful forex trading. The other is money management. If the money management rules are not strictly followed, the most profitable market and trade methods would not do much to make the trade fruitful.
MAM is one of the most popular money management systems in the Forex trading market.
What is Forex MAM?
MAM is an acronym for MULTIPLE ACCOUNT MANAGER. A multi-account manager refers to a single account used for trading by fund managers or money managers.
The money manager has one main account, which is generally referred to as the “Master Account”, whereas the rest of the managed accounts are known as sub-accounts.
The master account balance is equal to the total amount of the individual deposits of all sub-accounts. Money managers can execute trades across several accounts seamlessly with just a few clicks.
When traders want to invest in a money manager, they provide access to the money manager to handle their fund and trade with it.
The manager has only the power of trading on behalf of his clients via the “Master Account” he will not be able to access the personal accounts of the clients and make any transactions like deposits, withdrawal, and internal transfers. This limited power assures clients’ security.
What is MT4 MAM?
MetaTrader 4 (MT4) is one of the popular trading platforms that is used to trade a range of markets including forex, indices, cryptocurrencies, and commodities.
MAM works as portfolio diversification in Forex. When MAM is integrated with the MT4 trading platform, we can call it MT4 MAM.
Basic Attributes of a MAM
- MAM manager can handle the trade parameter easily and monitor in real-time.
- The number of trading accounts and deposit size is not limited.
- The best benefit is to have full, mini, and micro-lot accounts.
- Client allocations begin with 0.01 lots for each trade (1000 units).
- Both forms of orders accepted as standard: Market, Stop, and Limit.
- All unique order types accepted: Trailing Stop, Close by, and Close all.
- It can handle several master accounts that have various strategies
- The MetaTrader Administrator manages weekly, quarterly, and annual client reports.
- In real-time, it supervises commissions and results.
- There are various allocation types available including equity, balance, percentage, and lot.
Benefits of MAM in Forex Trading
The most important benefits are :
- MAM is the best for traders with less knowledge about the market as well as beginners.
- Provides multiple portfolios to take part in multiple trading. It reduces the chances of losing capital at a time.
- Offers effortless income source for traders.
- Ensures maximum security, control, safety, and transparency.
- A full-time account manager that can handle all of the trading activities for its clients.
How does the MAM work?
MAM is mainly used to allocate the profit come out after successful trading among the traders. Also, traders can set their leverage here according to their convenience. There are different types of allocation methods in MAM.
We will discuss one of them and try to understand this with an example:
Investor “One” contributes 5 000 EUR, 50% of the total amount
Investor “Two” contributes 3 000 EUR, 30% of the total amount
Investor “Three” contributes 2 000 EUR, 20% of the total amount
The total amount is 10 000 EUR.
When the MAM account makes a profit of 5 000 EUR, according to the agreement, the profit will be divided between the manager and investors. Suppose the ratio is 50:50. That means the manager gets 50% of the overall profit which is 2 500 EUR and the other 50%, 2 500 EUR will be allocated among three investors.
How will the allocation be now?
Investor “One” will get 50% of 2500 EUR = 1 250 EUR
Investor “Two” will get 30% of 2 500 EUR = 750 EUR
Investor “Three” will get 20% of 2 500 EUR = 500 EUR
This is how a MAM works.