The PAMM account, also known as the Percent Allocation Management Module. It features a management module that distributes the sizes of trades according to an allocation percentage. Therefore, this solution is offered by many forex brokers for investors and fund managers. With a PAMM account, an investor can also allocate a percentage of his account to one or more managers.
The manager’s PAMM account is a large “main account,”. Whose capital is equal to the sum of the sub-accounts.
The manager’s trades are automatically replicated in the sub-accounts according to a percentage basis. For example, if the trader makes a 100-lot trade on the EURUSD, the trade is divided among the individual sub-accounts (clients) into smaller parts. It is based on the percentage of equity of each sub-account in relation to the master account. This means that if the size of an individual sub-account is equal to 1% of the main account’s equity. The size of the trade on this account will be 1 lot (1% of 100 lots).
All the investors’ accounts are united together. The profits and losses are divided proportionally between investments.