What is PAMM ?

PAMM, which is the abbreviation of Percentage Allocation Money Management is the most popular system to automate and manage your trading. The biggest advantage of the PAMM is the percentage allocation of transaction volumes between all the investors. Allocation is usually made based on investor balances or equity. It is worth mentioning that all investor’s balances are copied to master (money manager) accounts, which have an aggregated balance of all connected accounts. It means that the master doesn’t have its own money, it has only a virtual balance which is equal to balances of investor accounts. In the PAMM system once the master executes a trade then it is allocated instantly and proportionally to investor accounts at exactly the same prices as it was done on the master account. There are some PAMMs which don’t show single transactions on investor trading accounts, but they have their own back office where only P&L related to trades are allocated. It is usually the less preferred way because usually, clients want to see all their trades on the trading account. It is also important to mention that investor accounts connected to PAMM can’t trade themselves, because it would impair the percentage allocation. However, it is usually possible to detach the investor account from Master at any time. If you are connected to the Master in PAMM system you can be sure that you will achieve the same results as the master account, which is not guaranteed in MAMs or Social (Copy) trading. Money Managers in PAMMs are usually rewarded by charging so-called management and incentive fees. Management fees are charged from investor balances usually on a monthly basis, incentive fees are strictly dependent on the profits obtained by the money managers and investors connected to it.

What is MAM ?

MAM solution (Multi-Account Management) is a derivative of the PAMM system. The main difference is that the allocation of trades between master and investor accounts can be made other way than proportionally. Each investor can select what risk he wants to take and what leverage he wants to have on his account. In other words, trades can be copied with different multipliers, which depend on the investor’s risk appetite. Usually, in MAMs copied trades are also executed as separate transactions and they are always visible on investor trading accounts. Similar to PAMMs investors can neither trade individually on the managed accounts, but they can detach from them at any time. In MAMs, however, master accounts balances are separated from balances of connected investors, which can result in different returns between them. Usually, in MAM master accounts are not publicly visible in leaderboards, they are rather private subscriptions for specific money managers. Summing up MAM accounts are designed for investors who would like to choose their own risk level and get more flexibility in managing their funds.

Social (Copy) Trading

Social trading is the most public way to manage your trading. There are special platforms such as ZuluTrade, eToro, TradeSocio, which provide an option to connect copy trading solution to your brokerage. They provide also their own database of verified signal providers with a bunch of various statistics for all of them. This is quite a big advantage because alternatively to PAMM or MAMs broker doesn’t have to look for trusted money managers on their own. It is also worth mentioning that MT4 and MT5 servers have their own copy trading service embedded in the platforms with quite a high number of providers available through MQL5 website. In social trading platforms, clients usually follow chosen signal providers with particular volumes They can follow multiple providers on one trading account, which is not possible in MAM or PAMM. At the same time, they can also trade on these accounts or close the positions opened by signal providers without any limitations. Results obtained on investor accounts are usually less correlated with signal providers as the whole money management is done by the investor himself. Providers are responsible only for results obtained on their accounts and provided signals can be used differently by various investors. Some of the platforms allow even inverting the trades of signal providers.