The defining risk of a PAMM account is that you are exposed to another person's trading and cannot intervene. There is no loss limit, you cannot attach a stop loss, and your only exit is a request that takes effect at the next rollover. Everything else follows from those three facts.

This guide is about what can go wrong and what you can do about it. For the mechanics of the arrangement itself, see what is a PAMM account. The product is set out on the ThinkMarkets PAMM money manager page.

What can go wrong in a PAMM account?

Six categories, and the first three are structural rather than market related. They exist whatever the manager does.

Six risks to understand before you invest

What each one is, and why it matters in a pooled account

Manager risk

What it is: You rely on one person's judgement, applied to an account you cannot intervene in.

Why it matters: There are no minimum experience or capital requirements to register as a manager, and managers are not required to invest their own funds.

Market and leverage risk

What it is: PAMM accounts trade leveraged products, and dynamic leverage applies on the master account.

Why it matters: Leverage increases both gains and losses, so a modest adverse move can produce a large percentage change in the pool.

No loss limit

What it is: There are no drawdown limits and investors cannot set a stop loss.

Why it matters: Nothing caps how far your investment can fall, and no automatic point exists at which the system protects your share.

Timing risk

What it is: Deposits and withdrawals are requests, approved and then processed at the next rollover.

Why it matters: You cannot exit at a moment of your choosing, and the market can move between your request and its processing.

Fee risk

What it is: A management fee is charged regardless of performance, and the performance fee has no cap currently configured.

Why it matters: Over a long flat period, fees alone can erode an investment. Trading costs are absorbed into the result without being itemised.

Information risk

What it is: You can see outcomes and trade detail, but not the manager's reasoning or intended risk.

Why it matters: You are watching results rather than decisions, which is why the questions you ask before joining matter.

What do you actually control?

Most risk questions become easier once you are clear about where your authority ends. The honest answer is that it ends at the decision to allocate and the decision to request a withdrawal.

Where your authority ends

Two decisions are yours. Everything else is not

What you control

Whether to allocate

The decision to join a manager's offer, and how much to commit

Which manager

Your choice of who trades it, made before you commit

Whether to request a withdrawal

You can submit a request at any time

Whether to detach

You can detach from the PAMM account

What you do not control

Any trade

Opening, closing or modifying a position is disabled at investor level

Any stop loss

There is no position of your own to attach one to

When you exit

Approval and the next rollover decide the timing, not you

How far it falls

No drawdown limit exists in the platform or the offer

Why does manager risk work differently here?

You are relying on one person's judgement applied to an account you cannot touch. That much is true of any managed arrangement. Two features sharpen it in a PAMM account.

Registration sets no bar. A money manager does not have to evidence experience, a track record, a deposit or capital to register, so the assessment falls entirely to you before you allocate rather than to a screening process beforehand. The checks worth making are set out in how to choose a PAMM money manager.

A manager may also have nothing of their own in the pool. Depositing own funds is encouraged but optional, so it is possible to be allocating to someone whose only financial exposure to a bad run is the fees they do not earn.

What does no loss limit actually mean?

It means no number exists at which anything stops. Neither the platform nor the manager's offer sets a floor under your share, so the full trading result reaches you however far it goes.

This is the point investors most often misjudge, because it differs from a personal trading account where you would set your own exit. Here you cannot. Trading is disabled at investor level, so you cannot place, modify or close anything, and there is no stop loss to attach to an investment that holds no positions of its own.

What happens at stop-out?

Stop-out is the one automatic protection in the structure, and it protects the account rather than you.

What a stop-out does

It protects the account, not your share

Margin falls

The master trading account's margin level drops towards the stop-out level as losses build.

Positions close automatically

Closure happens on the master account, because that is where every position sits.

Losses are realised

What was floating becomes realised loss on the master account.

Shared proportionally

The realised losses are distributed across every investor by share, all at once.

It applies at the master trading account level, because that is where the positions are. Investor accounts are never stopped out individually, as they hold nothing to close.

Why can you not exit immediately?

Because a withdrawal is a request rather than an action. It is created, approved, then applied at the next rollover, which runs hourly by default.

Why you cannot exit instantly

A withdrawal passes through four stages before it takes effect

Request created

You submit a withdrawal request. Nothing moves yet.

Pending

The request sits awaiting a decision from the money manager or ThinkMarkets.

Approved

The request is accepted. It still does not take effect at this point.

Processed at rollover

The balance updates at the next rollover, with partial close applied to any open positions.

The market can move between your request and its processing.

That sequence keeps every investor's share accurate, which is the reason it exists. The consequence is that the gap between deciding to leave and actually leaving is not under your control, and the market can move inside it.

If positions are open when the withdrawal processes, only your proportional part of each is closed, and the realised result on that part is allocated to you because your exit triggered it.

How do fees add to the risk?

A performance fee cannot hurt you in a losing period, because it only comes out of profit. A management fee can, because it is charged on your equity whatever the result.

Over a long flat or negative stretch, that charge alone reduces the investment, which is why the rate and the trading interval are worth checking before you join rather than after. The rates sit in the manager's offer and the calculations are in PAMM fees explained.

What can you not see?

You can see outcomes in detail. You cannot see intent.

The standard configuration shows your share, the pool total, the investor count, the manager's own funds and floating result, and trade level detail. None of that tells you why a position was opened, how much risk the manager intended to take, or whether the approach has quietly changed. You are reading results and inferring decisions, which is why what you ask before allocating matters more than what you watch afterwards.

What is the risk if a money manager becomes inactive?

Access is not the problem. Timing is.

Investors leave through the standard withdrawal process, approved by the money manager or by ThinkMarkets and then processed at rollover, and an investor can also detach from the account. But an inactive manager still sits in the approval path in the normal flow, so it is worth asking how a manager handles absence before you allocate rather than discovering it when you want out.

How much should you allocate?

Not a question anyone can answer for you, but the structure points at a principle. Because there is no loss limit, no stop loss and no instant exit, a PAMM allocation behaves like capital you have committed rather than capital you can retrieve on demand.

What the structure implies about size

Three features that make a PAMM allocation behave like committed capital

No floor

Nothing caps the fall

There is no drawdown limit, so the amount at risk is the amount you allocated.

No brake

You cannot set a stop loss

Trading is disabled at investor level, so you cannot limit a loss once it starts.

No instant exit

Withdrawals take effect at rollover

The gap between deciding to leave and leaving is outside your control.

Size it as money you can afford to lose and can leave alone, and keep it separate from funds you may need at short notice.

Frequently asked questions

Is a PAMM account safe?

No managed arrangement removes the risk of loss. A PAMM account carries market and leverage risk, plus the risk of relying on another person's decisions with no loss limit and no investor stop loss. You can assess the structure and the manager, but you cannot remove the risk.

How much of my investment is at risk?

All of it, in the sense that nothing in the platform caps the fall. Your share drops with the master account's losses, and if that account is stopped out the realised losses are distributed across every investor in proportion to their share. Only allocate what you can afford to lose.

Can a PAMM investor set a stop loss?

No. Trading is disabled at investor level, so you cannot place, modify or close trades and there is no position to attach a stop to. The only control over your exposure is to submit a withdrawal request, which is approved and then processed at the next rollover.

Are there drawdown limits on a PAMM account?

No. Neither the platform nor the money manager's offer settings cap how far an investment can fall, so your funds are exposed to the full trading result of the master account. This is a key difference from arrangements that include a loss limit.

What happens if the PAMM master account is stopped out?

Positions close automatically on the master trading account when its margin level reaches the stop-out level, and the realised losses are distributed to investors in proportion to their share of the pool. Investor accounts are not stopped out individually, because they hold no positions of their own.

What is the risk if my money manager becomes inactive?

Mainly a timing risk rather than an access one. You exit through the normal withdrawal request process, which an inactive manager still sits in, so delays are possible. Ask how a manager handles absence before you allocate.

Does ThinkMarkets cover losses made by a money manager?

No. ThinkMarkets provides the platform and the allocation technology, and does not select, vet for performance, recommend or endorse any money manager, or provide investment advice. Trading losses in a PAMM account are borne by the investors in proportion to their share.