To further explain how a PAMM Account works, we are going to create an example.
Andre and Lonnie would both like to start trading and making a profit from trades. They lack the necessary experience or skill to do so but would still like to benefit from trading. This is where a Money Manager would come into play.
Andre and Lonnie invest their funds into Dontrell who is a well-experienced trader who became a Money Manager.
As the Money Manager, Dontrell creates an offer to join his fund for 30%
As an Investor, Andre contributes $8,000 (80%) to the fund.
As another Investor, Lonnie contributes $2,000 (20%) to the fund.
The pool of funds would amount to $10,000 in total. If Dontrell makes successful trades and ends up with a profit of $4,000, the PAMM System will split up the profits according to the amount contributed by each Investor via percentage. This would mean that Andre will receive $3,200 (80%) in profit and Lonnie will receive $800 (20%) in profit.
Dontrell on the other hand will receive payment through the percentages set in his offer before Andre and Lonnie decided to join the fund. This means that when Dontrell's performance fee is taken into consideration, the decided percentage of this fee will also be deducted from the profit of the trade.