Copy Trading vs. Managed Accounts (PAMM/MAM): What’s the Difference?

Copy trading and managed accounts both let you benefit from another trader’s decisions, but they work very differently, and the difference matters for your control, your risk, and the regulatory picture. The simplest way to tell them apart is to ask: who holds the money, and who has discretion?

Copy trading: you keep control

In copy trading, your capital stays in your own brokerage account. You subscribe to a strategy, and software routes the matching trades to your account, each one sized by the rules you set. You decide the position sizing, the maximum exposure, the daily-loss caps, and whether automation is even on. Nobody else can withdraw your funds or trade outside your limits. RelayTrades works this way: it provides the automation and safeguards, but never takes custody or discretion.

Managed accounts (PAMM/MAM): you delegate control

A managed account hands trading discretion to a manager. In PAMM (Percentage Allocation Management Module) and MAM (Multi-Account Manager) structures, a manager trades a master account and the results are allocated across investors’ funds, often pooled. You typically cannot override individual trades, and the manager, not you, controls the positions. These arrangements usually require the manager to be appropriately licensed, because they involve discretionary management of other people’s money.

Side-by-side

• Custody of funds, Copy trading: your own account. Managed account: manager-controlled or pooled.
• Who has discretion, Copy trading: you (you set limits and can go manual). Managed account: the manager.
• Position sizing, Copy trading: your settings. Managed account: the manager’s allocation.
• Ability to stop, Copy trading: pause, manual mode, or kill switch anytime. Managed account: usually subject to redemption terms.
• Typical regulatory status, Copy trading: automation software + your regulated broker. Managed account: discretionary manager, usually licensed.

If keeping your money in your own account and controlling the risk limits matters to you, copy trading is the model that preserves that, the platform automates, but you stay in charge.

Which is right for you?

Neither model removes market risk, and both depend on the skill of the trader behind the strategy. If you want hands-off delegation and are comfortable with a licensed manager having discretion, a managed account may suit you. If you want to keep your funds in your own account, set your own safeguards, and be able to pull the plug instantly, copy trading is the closer fit. Whichever you choose, remember that past performance is not indicative of future results and you can lose money.