Here is an example of how the PAMM account works: Lucas and Patrick would like to enter the trading world and start making profits, however, they are not into trading activities or they are not experienced enough yet.
Martha on the other hand is an experienced trader and is interested in finding Investors to allocate funds to the pool for him to trade on their behalf. Martha can become a PAMM Money Manager and open the fund.
Martha (Money Manager) sets the offer to join the fund as 40%.
Lucas (Investor) puts in $6000 – 60%
Patrick (Investor) puts in $3000 – 40%
Martha (Money Manager) makes a profit from a position that makes $1000 profit. The PAMM system will allocate 60% ($600) of the profits to Lucas and 40% ($400) to Patrick. If the position ends up in a loss, the same will apply.
When charges from the offer on the fund are applied, that percentage will be taken out from the $1000 and the remaining profit will be distributed accordingly to all the Investors based on what percent they each have in the pool.