LAMM

The LAMM does have its unique advantages and is sometimes used by much smaller money managers for their clients. The LAMM allows you to allocate a specific amount of lots that you would like to trade per sub account. For example if your master account consists of 2 sub accounts each with $50,000, but investor 1 wants to be much more aggressive than investor 2 the LAMM will allow the money manager to allocate more lots per trade for investor 1 than for investor 2. With this structure investor 1 can be a lot more aggressive than the other even though they invested the same amount of money into the master account.

With the PAMM model the manager does not have that flexibility although most investors do not require it. There are however many other advantages to the PAMM such as ease of use. With the PAMM model all of the profits/losses are aggregated among the accounts based on the percentage of the master account that they make up.

A simple example is if a $100,000 master account is comprised of 2 sub accounts; 1 with $60,000 (making up 60% of the master) and one with $40,000 (making up 40% of the master) the $60,000 account will get to keep 60% of the profits and the $40,000 will get to keep 40% of the profits.