LAMM and RAMM: fixed lots or a risk multiplier?

Some managed accounts write “volume allocation” or “risk multiplier” in their terms, and many investors pass right by it; while that single line decides what size the manager trade lands on your money. What is LAMM and RAMM? LAMM and RAMM are two allocation styles in multi-account management: the manager trades their own account and the system opens the same trade for every investor — in LAMM with a pre-set “fixed volume”, and in RAMM with your chosen “risk multiplier” relative to the manager volume. This article opens up the difference between the two with a numerical example, so you know which setting is right for your capital and risk tolerance.

What is LAMM and RAMM, and where do they stand among the methods?

In multi-account management (MAM), every investor has their own separate account and sub-account, and the manager trades on all of them from one seat. The question is: at what volume should the manager trade be opened in each investor account? LAMM and RAMM are two different answers to that same question. LAMM says a fixed volume (for example 0.1 lots) is set for each investor and every manager trade is replicated into their account at that same volume, regardless of how large their capital is. RAMM says each investor volume is built from a multiplier of the manager volume; a multiplier of 1 means the standard proportion, 2 means twice that proportion, and a half means half of it. Both styles are siblings of copy trading, with the difference that their framework is organised multi-account management, not the free following of a signal provider.

LAMM: fixed volume — simple, and dangerous for a mismatched account

In LAMM the lot figure is fixed and does not go up or down with your capital. That very simplicity is both its strength and its trap. If your capital is close to the capital that volume was designed for, everything is proportional. But if your capital is much smaller, that same fixed volume can land on your account at several times the safe proportion; and if it is much larger, you are effectively not using your money capacity. The golden rule of LAMM is this: before starting, calculate the effect of one sample trade at that fixed volume on your own balance — if the manager entered a trade at that volume and its stop-loss was hit, what percentage of your account disappears? If that percentage does not match your tolerance, that LAMM is not for you, however good its manager is.

RAMM: the risk multiplier — flexibility in your hands

In RAMM you choose the multiplier and all trades are scaled up or down by that same ratio. A larger multiplier means larger profit and larger loss; and that sentence must be read in full: the multiplier is “the size of your experience of the same manager”, not a button for more profit. Choosing the multiplier comes from two places: the ratio of your capital to the manager base capital (a smaller account usually wants a more cautious multiplier) and your real risk tolerance — not the figure you would like to see. The logical start for most investors is a multiplier of 1 or less; raising it only makes sense once you have seen the manager record across several market seasons and have calculated its amplified drawdown, in numbers, on your own capital.

A numerical example: one trade, three fates

Suppose the manager opens a trade of 1 lot whose result on their own account (with 20,000 dollars of capital) becomes a positive 2 percent. Now see three investors: the first sits in LAMM with a fixed 0.1 lots and 2,000 dollars of capital; the relative effect of that same trade on their account is roughly the same 2 percent, because their proportion to the manager was matched. The second is also in LAMM at 0.1 lots but their capital is only 500 dollars; the same trade feels four times heavier for them, and had the trade lost, their drawdown would have been four times the manager percentage. The third is in RAMM with a multiplier of a half and 500 dollars of capital; the trade effect lands on them at half the manager proportion and stays matched to their capital. The lesson of the example: in LAMM, you must check the “proportion” yourself before starting; in RAMM the proportion is built by the multiplier — but choosing the multiplier wrongly brings the same risk back.

LAMM and RAMM versus PAMM and copy trading

For the overall picture of the methods, see the managed accounts glossary, and read the PAMM account mechanism in what is a PAMM account.

A checklist for choosing and starting

• In LAMM: calculate the fixed volume effect on your own balance with a sample trade; what percentage is it?
• In RAMM: take the multiplier from your capital ratio and risk tolerance, not from the displayed profit.
• See the manager record from a clear source (live data or statement); the reading method is in verified versus declared returns.
• Know the rules for changing the fixed volume or multiplier before starting; can it change mid-way, or is it locked?
• Start with a conservative setting and leave increasing to after several weeks of behaviour matching expectations.
• For the general logic of position sizing, read the position size calculator.

The start is the LAMM and RAMM accounts, and the step-by-step connection and settings guide is in the complete LAMM and RAMM guide.

How to read the settings on the account page

On every LAMM and RAMM account page, find three things before any decision: the allocation type (fixed volume or multiplier), that account default figure, and the rule for changing it along the way. If you see a fixed volume, right there measure its effect on your own balance with one simple rough calculation: the fixed volume times the value of one pip, divided by your balance, tells you what percentage of your account one ordinary manager trade moves. If you see a multiplier, ask relative to what base it is defined and whether a total stop cap is also active on the account. And in both cases, know your exit plan from day one: at what sign do you reduce the volume or multiplier, and at what sign do you leave completely. An account whose setting and exit rules cannot be found on its page is not yet ready for your money.

An honest warning

LAMM and RAMM are “sizing adjustment” tools, not risk-removal tools. No fixed volume and no multiplier makes a bad manager good, and none insures a good manager either; these settings only decide how large or small your experience of the same manager will be. So the correct order is always this: first a reviewed manager with a sourced record, then a size setting matched to your capital. Anyone who reverses the order and talks about large multipliers first is selling you risk.

In both cases, no multiplier removes risk; it only changes its size.

Frequently asked questions

Are LAMM and RAMM subsets of MAM? In practice yes; both are allocation styles in multi-account management, and the difference is how the manager trade volume reaches your account: a fixed volume in LAMM, a multiplied volume in RAMM.

How do I choose the RAMM multiplier? Start from the ratio of your capital to the manager base capital and from your real risk tolerance, not from greed. A multiplier of 1 or less is the logical starting point for most investors; a larger multiplier enlarges the loss at exactly the same ratio.

Can I change the multiplier or fixed volume mid-way? The rules for changing settings are set by that account terms; in some accounts it is possible at every settlement window, in others it is limited. Read it on the account page and the method guide before starting.

How exactly does the manager trade reach my account in LAMM and RAMM? The manager trades their own account and the system opens the same trade simultaneously in your sub-account: in LAMM with the set number of fixed lots, in RAMM with a volume built from your risk multiplier applied to the manager volume. Stop-loss and take-profit are replicated with the same logic.

For whom is LAMM more dangerous? For an investor whose balance is much smaller than the capital that fixed volume was designed for; because the relative effect of every trade on their account becomes several times the manager. Calculating one sample trade before starting exposes exactly this danger in five minutes.

The bottom line

What is LAMM and RAMM? Two answers to one question: at what size should the manager trade land on your money. LAMM gives a fixed volume and trades its simplicity against the mismatch danger for small accounts; RAMM gives multiplier flexibility and hands you the responsibility of choosing it correctly. In both: first a reviewed manager, then the size setting. Start from the LAMM and RAMM accounts list, see the setting effect on your own capital in numbers, and enter conservatively.