A PAMM (Percentage Allocation Management Module) account allows a fund manager (the PAMM Master) to manage multiple trading accounts from a single account without creating a separate investment fund. The performance (profits and losses) of the PAMM Master is distributed among all the managed investor accounts based on their share of the total capital.

In a PAMM account, a client (the investor) allocates funds to another client (the PAMM Master) who trades with the same broker. The PAMM Master executes trades on behalf of the investors, and every time the Master makes a profit, the investors pay a performance fee based on their share of the profit. The Master’s trading strategy is applied to all accounts, and the profits (or losses) are distributed accordingly.

Here’s how it works:

• The PAMM Master uses their trading strategy to decide on which trades to execute, asset allocation, and risk management.
• Investors allocate funds to the Master’s strategy and share profits and losses from the trades made on their behalf.
• When the Master makes a profit, the investors pay a performance fee based on their share of the profit. The PAMM Master earns income from these fees, usually as a performance fee and/or management fee.
• Investors do not have real-time visibility of the trades but experience profits or losses based on the strategy followed, managed by the master.
• Investors can withdraw their funds at any time, giving them flexibility and control.

In essence, a PAMM account allows traders to manage multiple investor funds simultaneously while investors are able to participate in the trading strategy.