In this blog post, we are going to run through the top 8 MAM account allocation methods available to you.
ACY Securities provides fund managers and money mangers a MAM system for managed trades for many sub-MAM accounts with the MetaFX Multi Account Manager from KeySoft Group.
The Multi Account Manager provides professional traders and fund managers the essential tools to allocate and manage funds. The MAM accounts provide 10 different allocation methods with eight allocation methods by volume and 2 allocation methods by profit and loss.
Different allocation methods
The different allocation methods allow the fund manager or trader to allocate trades to individual sub accounts either via lots, percentage or proportional allocation to suit their trading strategy or structure.
1. Lot allocation
The lot allocation method is used to divide the volume of the master trade to the sub-accounts according to the lot parameter of the sub-accounts. This method allows trading with variable lot sizes on the master account.
The allocation to the subaccounts will be proportional to the set lot sizes provided for each of them. Note, when using lot allocation, at least one of the active subaccounts need to have a balance greater than zero.
2. Percentage allocation
The percentage allocation method is used to divide the volume of the master trade to the sub-accounts to the set percentage parameter of the sub-accounts.
Hence, the volume will be allocated to the subaccounts by the predetermined percentage nominated by the fund manager. You can view the difference between MAM PAMM accounts here.
Note: When using the Percent Allocation the sum of the percentage parameter must add up to 100%.
3. Proportional by Balance Allocation
The proportional by balance allocation allocated the master trade proportionally according to the balances of the subaccounts. This method does not require additional settings to be changed and allocates the master trades automatically.
4. Equity Percent Allocation
The equity percent allocation is used when the user requires allocation to sub-accounts on a percentage basis of each individual sub MAM.
This allocation method allows it to define the risk for each individual sub-MAM. For example, if the risk percentage of the sub-account is placed at x%, then only x% of the sub-account equity would be traded at any given time.
Note: This allocation method requires the user to predetermine the percentage of the sub-account equity which will be traded at any given time.
When using the equity percent allocation, the volume of the master trade is changed to reflect the sum of volumes of the sub-trades. The volume on the initial trade request would be different from the open trade to reflect the sum of volumes of the sub-MAMs.
5. Allocation by Equal Risk
Allocation by Equal Risk mitigates the issues with margin control on the subaccounts.
This method allows the user to set minimum margin percentage levels for each of the sub-accounts. If the minimal margin percentage limit is reached, there will be no allocation to those sub-accounts.
6. Lot Multiplier Allocation
The lot multiplier allocation copies trade from the master account to the sub-account.
There are several modes with the lot multiplier allocation and this can be selected for each individual sub-account separately. These modes allow different kinds of calculations of the sub-trade volumes.
- Multiplier Mode
In the multiplier mode, the lot parameter of the sub-account is used as a multiplier factor for the master trade. The volume of the master trade remains unchanged. - Fixed Mode
The fixed mode is selected for the sub-account when the volume of the sub-trade will be defined by the Lot parameter of the sub-account regardless of the lot size of the master trade. - Risk Mode
If the risk mode is selected for the sub-account then the volume of the sub-trade will be calculated as a proportion of the sub account’s equity to the master account equity. - Equity Mode
If the equity mode is selected for the sub-account then the volume of the sub-trade will be calculated as a percentage of the sub account’s equity.
7. Percentage Allocation by Profit and Loss (P/L)
The allocation by percentage allocation by P/L is used when the user requires allocation to the sub accounts on a percentage basis.
This method is more precise in general, as the allocation is made without opening trades on the sub accounts.
Instead, when the master trade is closed, the allocation to the sub accounts is made as a deposit/withdrawal transaction.
8. Proportional Allocation by Profit and Loss (P/L)
The proportional allocation by P/L is used when the user requires allocating to sub accounts proportionally to the sub accounts balances.
Like the percentage allocation by profit and loss, this method is more precise in general, as the allocation is made without opening trades on the sub accounts.
When the master trade is closed, the allocation to the sub accounts is made as a deposit/withdrawal transaction.
Summing up the top 8 MAM account allocation methods
Hopefully, this blog post gives you, the money manager, a solid overview of the top 8 management modules you have available in your managers account.
Getting your head around managed Forex accounts is simple when you have all the information. To discuss the full suite of trading tools, trading accounts and platforms available, don’t hesitate to reach out to myself or one of our team members.
We can run through the full list of trading instruments available to you, our sophisticated trading solutions, onboarding options and more.
How can ACY Partners help you?
At ACY Partners, we can help you establish your MAM manager account and run through the different allocation methods.
Why not jump on a call with our team today so we can get clear on your goals and expectations, and see if we can help you.