PAMM, MAMM and copy trading, in plain words

Brokers offer several products that let clients benefit from, or suffer from, someone else's trading decisions. The names get used loosely, so here is how each one works underneath.

PAMM: one pooled account

PAMM stands for percentage allocation management module. Investors put money into a pool that a manager trades as a single account. Profit and loss are shared in proportion to each investor's stake, after the manager's agreed fee.

The investor never sees individual trades land in their own account. They hold a share of a pool, a little like units in a fund.

MAMM: many accounts, one hand

MAMM stands for multi-account manager. Each investor keeps a separate account, and the manager's trades are placed across all of them at once, sized by a rule such as lot allocation or account equity.

The investor can see every position in their own account. The manager gets the convenience of one order ticket instead of fifty.

Copy trading: follow and mirror

In copy trading, a client chooses a trader to follow and their account mirrors that trader's positions automatically. The follower stays in control: they can change the size, stop copying or close a position themselves at any time.

The differences that matter

	PAMM	MAMM	Copy trading
Where the money sits	Pooled	Investor's own account	Follower's own account
Who places trades	Manager	Manager	Copied automatically
Investor sees each trade	No	Yes	Yes
Investor can intervene	Rarely	Limited	Yes

A note on rules

Managing other people's money is regulated in most countries, and the rules differ widely. Whether a broker may offer any of these products, and to whom, depends on its licence and jurisdiction. The technology is the easy part.

This post is general information about technology and the brokerage industry. It is not financial, investment, legal or regulatory advice, and it is not an invitation to trade.