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Percent Allocation Money Management (PAMM)

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Definition of 'Percent Allocation Money Management (PAMM)'

Percent Allocation Money Management (PAMM) can refer to two different aspects of money management.

1. PAMM can refer to the ability to deal multiple accounts from one master account using a percentage-based allocation and a single order. Say that your portfolio holds 3 stocks; IBM, MSFT, APPL. If you want to cash out $50,000 from your portfolio you can do so by allocating a percent to each stock and executing the sell order. The trading platform will perform the calculations according to the percentages that you allocated and sell the appropriate amount of stock. This also applies to buying stock and re-balancing your portfolio.

i.e. definition one refers to the buying and selling of stock in your portfolio according to percentages.

2. PAMM (Percentage Allocation Management Module) can also refer to the management of a fund and the owners of the fund by percentage. If a fund or trading account is constituted of several investors' accounts and is being professionally management then the allocation of profits and losses in that fund needs to be correctly distributed among the members in proportion of their investments.

i.e. definition two refers to the allocation of profits and losses among a group of investors who own the fund.

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