MAM and PAMM solve the same business problem — letting one trader manage money for many investors — with two different structures. The structural difference determines what each is good at.
How MAM works
The manager places a trade on a master account. The system distributes that trade across the investor accounts under management, sizing each according to the chosen allocation method — proportional to balance, proportional to equity, or a defined ratio.
Crucially, each investor keeps their own trading account. They have their own balance, their own statement, and they can see exactly what was traded on their behalf. The manager holds execution rights, not ownership.
This matters when investors have different risk appetites or when a manager wants to run slightly different exposure for different clients.
How PAMM works
Investors contribute capital into a single pool. Each holds a percentage share proportional to their contribution. The manager trades the pool as one account, and profits and losses are allocated strictly by share.
The subtlety is share recalculation. When someone deposits into or withdraws from the pool, every share must be recomputed so that new money does not inherit results it was not present for, and existing investors are not diluted. Getting this arithmetic right is the main thing separating a sound PAMM implementation from an unsound one.
Where copy trading sits
Copy trading is a third model and it is worth distinguishing. In copy trading, followers keep their own accounts and independently choose to follow a strategy — they subscribe and unsubscribe themselves, and there is no management mandate.
- Copy trading — client-initiated, client-controlled, no mandate. Retail-facing.
- MAM — manager-initiated under mandate, separate accounts. Professional.
- PAMM — manager-initiated under mandate, pooled capital. Professional.
Which should a broker offer?
Most brokers that serve professional managers end up offering both, because managers arrive with a preference already formed. If you must choose one to start, PAMM is easier to launch and explain; MAM is what managers with differentiated mandates will ask for.
If your client base is retail rather than managed-money, copy trading is more likely the right first product.
Explore both in the demo
The demo includes MAM allocation and PAMM pool views on sample data.