The three models in one table
| Copy trading | PAMM | MAM | |
|---|---|---|---|
| Who holds the account | Each follower, in their own name | One pooled account under the manager | Sub-accounts in clients' names, traded as a block |
| How trades reach the client | Mirrored order by order, with scaling | Not mirrored: results are split by share of the pool | Allocated per sub-account by lot, equity or percentage |
| What the client controls | Start, stop, scale, caps, instrument whitelist, manual override | Deposit and withdraw at allowed times | Deposit and withdraw; sometimes per-account limits |
| Typical users | Retail followers and social-trading products | Money managers with pooled clients | Managers who need per-client allocation and reporting |
| Regulatory posture | Can be portfolio management when fully automatic | Managed money; usually needs a management permission | Managed money; usually needs a management permission |
| Technology | Server-side copier, performance pages, subscription billing | Platform PAMM module and allocation engine | Platform MAM module and allocation engine |
Copy trading, in detail
A leader trades a normal account. A copier service watches that account and places equivalent orders in each follower's account, scaled to the follower's rules: a fixed lot, a multiple of the leader's size, or a proportion of equity. Followers can cap exposure per trade or in total, restrict which instruments are copied and close a mirrored position by hand. Because every follower holds their own account, statements, margin and risk stay individual.
The hard parts are execution and fairness. Orders must reach followers within milliseconds of the leader, slippage must be measured and shown, partial fills and symbol-name differences between servers must be handled, and the leader must not be able to game the performance page.
PAMM and MAM, in detail
PAMM (percentage allocation management module) pools client deposits into one trading account the manager controls. Profit and loss are allocated by each client's share of the pool at settlement; clients usually can only deposit or withdraw at rollover points. MAM (multi-account manager) keeps separate sub-accounts but lets the manager trade them together from a master terminal, with allocation per trade by lot, equity or percentage. MAM gives per-client reporting and limits; PAMM is simpler to run.
Both are managed money: the manager decides, the client does not. That is why most regimes treat them as portfolio management and why the platform vendor's own PAMM or MAM module, rather than a copier, is the normal technology choice.
The regulatory question comes first
The European Securities and Markets Authority has said that automatic copy trading, where the client's orders are executed without the client's intervention for each trade, can amount to portfolio management under MiFID, which needs the corresponding permission. Other regimes draw the line in different places: some treat copy trading as execution-only with a signal service attached, some as advice, some as management. Before launching any of the three models, get a written view from counsel in each jurisdiction you serve, and build the product so that the follower's level of control matches the position you take.
What the technology must do
- Cross-server pairing: a leader on one MT5 server and followers on another, including another broker, through an orchestration layer rather than a terminal Expert Advisor.
- Per-follower rules: scaling, exposure caps, instrument whitelists and a slippage-aware scheduler that does not fire followers into a moving market blindly.
- Leader pages: verified performance, drawdown, open positions with a delay, fee terms, and subscription management with automatic payouts.
- REST-first integration: the copier plugs into your traders' room and CRM so subscriptions, billing and support share one client record.
- Audit: every mirrored order carries the leader order it came from, the rule that scaled it and the price it filled at.
Launching copy trading in four steps
- 01 Decide the model and the permission Copy trading with follower control, or a managed product on the platform's PAMM/MAM module. Counsel signs off on the model before engineering starts.
- 02 Connect servers Leader and follower servers are connected through the orchestration layer with least-privilege manager access.
- 03 Publish leaders Leaders are listed with verified performance; followers subscribe from the traders' room and set their rules.
- 04 Mirror with rules and report Scaling, caps and whitelists apply before any order is placed. Brokers see volumes and spreads; followers see their mirrored history.
Where EntropyX Labs fits
Social Copy is copy-trading software for MT5 brokers and prop firms: leader and follower pairing with fan-out across servers and brokers, per-follower scaling, caps and instrument whitelists, a slippage-aware execution scheduler, leader performance pages with subscription management, and a REST API so it drops into an existing traders' room or Brokerage CRM. It runs self-hosted or in our managed cloud. PAMM and MAM are platform modules and are not something we sell.
Sources and further reading
- ESMA, Supervisory briefing on copy trading services (ESMA35-42-1428, 30 March 2023), which applies its 2012 Q&A on automatic execution of trade signals — ESMA's Q&A position that automatic execution of trading signals without client intervention amounts to portfolio management
This guide is engineering and product guidance from EntropyX Labs, a technology provider. It is not legal, regulatory or investment advice.