Investing in managed accounts, from zero · Lesson 1 of 4
PAMM, MAM, copy trading and dedicated management: what is the difference?
7 min
Why understand the method first
Before you ask "how much does it make?", you need to know where your money stays and who has trading authority. Those two questions reveal the main risk of every method.
Four common methods
| Method | Where the money is | Who trades | Key point |
|---|---|---|---|
| PAMM | Your account with the broker, linked to the manager's account | The manager, on the master account | Profit and loss are shared in proportion to each investor's stake |
| MAM | A sub-account in your name with the broker | The manager, allocating volume to sub-accounts | Each sub-account has its own risk and volume |
| Copy trading | Your own account | Software copies the manager's trades | You set the volume and the stop yourself |
| Dedicated management | Your own account | The manager, with your trading password | The manager has the most authority; it needs the most care |
One simple rule
The more authority you give someone, the more evidence you should see from them. In PAMM and MAM, the money stays with the broker and the manager cannot withdraw it. In copy trading you do not even share a password. In dedicated management the manager holds your trading password, so the choice must rest on a verified record, not on personal trust.
Next step
The investment methods guide covers each method in detail. In the next lesson you will learn to read an account's track record properly.
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