The Predecessor of PAMM: Lot Allocation Management Module (LAMM)

In LAMM, investors can choose the amount of lots that they want to trade. LAMM is commonly known as the predecessor of PAMN but it is neither commonly used by traders nor widely offered by forex brokers.

LAMM investors can decide a replication ratio by allocating the capital involved for each trade. This option gives investors the flexibility of different leverage levels and risk tolerance. The profit or loss in LAMM will be calculated based on the replication ratio selected.

LAMM trading requires the trader to deposit the same amount of capital as the money manager. For example, if the money manager is managing an account of $5,000, the LAMM trader needs $5,000 too.

One significant advantage of LAMM trading is that investors can invest in multiple money managers at the same time, spreading the risk. LAMM trading can be a good option for beginners or those who are unsure about analysing and executing their own trades. Therefore, it is a low risk and fairly profitable way as long as they find a suitable money manager that can be consistent and who can also match the amount of funds that they are ready to invest in the forex market.

Traders' and money managers funds are kept in separate accounts that are managed by a broker. The broker's LAMM software allows the investor to automatically copy the money manager's trades. The investor is not required to interact, but they can choose to disconnect and stop trading at any time.

This arrangement means that when the money manager makes a profit, so does the investor. Similarly, trader losses are passed on to the investor. In exchange for the service, investors pay the trader commission fees, which are typically a percentage of the profit.

As mentioned, LAMM accounts and money managers all operate under a specific forex broker. Therefore, it is important for LAMM traders to do conduct an in-depth research on the forex broker before engaging with its LAMM service.

Here are some of the forex brokers that offer LAMM services, and are reliable according to the WikiFX rating system: