16:37How to choose a PAMM account for earnings in Forex
How to choose a PAMM account for earnings in Forex
Less than a dozen years ago, special trading accounts appeared on the Forex currency market - PAMM. Their homeland - overseas spaces, to us in the country PAMM-accounts were a couple of years later. How did regular Forex speakers appear on the market of new products, which is perceived today as a worthwhile? Skepticism, suspicion, distrust - the first emotions that arose in investors and traders in the appearance of a new financial instrument. Today, PAMM-accounts are the basis on which the main relations of investors with traders are built. Trust management, through which Forex earnings became accessible to all interested persons, is something that is hard to imagine the currency market. At the moment, PAMM-accounts use unpredictable demand, bringing in practice their efficiency and profitability. With no special financial knowledge, thanks to PAMM-accounts, today anyone can entrust their money to the management of professional traders, gaining comfort, reliability and maximum protection against possible risks.
Each year, the number of PAMM-accounts is growing, brokers bring to the market updated, improved and efficient products. What this, not indicating that PAMM-accounts have proven themselves, have earned the trust of clients of brokerage companies and have firmly taken their niche in the market. Whether this instrument is less effective or extremely risky, it would have survived itself without losing competition with other Forex instruments.
So, a bit of a liquefaction: PAMM is in the English version of the "Percent Distribution Management" module. The participation of investors in such an account, as well as the distribution of profits, is proportional to the share participation of everyone who "poured" their money into the PAMM account (be it numerous investors, or the trader himself, who manages this account). What proportion of interest is the investor among other investors, entrusted their funds to the manager, for the same percentage, he can count on the distribution of profits.
If we give a simple example of the operation of a traditional PAMM account, then this will look like this:
Some terrier decided to trade in the system of PAMM-accounts and created his PAMM, having replenished it for 100 thousand dollars. This money - his personal funds, that is, the capital of the manager. The manager makes an offer indicating that the trading period will last for one week, and the profit will be distributed between him and his investors in a proportion of 50/50.
That is. When the trading week ends, all profits will be divided in half between the manager and all investors. Who trusted him his money.
Investors, who are satisfied with such investment conditions, invest their money in this PAMM-account. To simplify the example, assume that there are only two investors. One of them invested in the PAMM 50 thousand dollars, and the other was able to invest only 20 thousand dollars.
So, after the distribution of profit, we see the following picture:
The first investor: 10% of 50 thousand dollars - is $ 5,000. But the manager's offer shows that 50% of the revenue is taken by the trader. So, the investor gets $ 2,500. Total = $ 52,500.
The second investor: 10% of 20 thousand dollars - is $ 2,000. 50% of them - $ 1,000. Together = $ 21,000.
Manager: 10% of $ 100,000 is $ 10,000. Plus $ 2,500 from the first investor and $ 1,000 from the second investor. Together = $ 113,500.
This example suggests that the manager is profitable when he receives as many investors as possible from his account. In this case, the size of the profit will be much higher. And it is profitable for investors to invest in a PAMM-account of a successful manager, whose work shows positive profitability. That is, the profit in the manager's interest to trade positively - on the face.
As a rule, experienced investors distribute their funds immediately between several PAMM accounts of different managers, remembering the golden rule-not all eggs can be stored in one basket to secure investments and increase the likelihood of good income.
On the site of any broker in the current state the rating of current PAMM-accounts is maintained, among which you can choose the best ones for yourself. From such ratings one can find out the history of this or that PAMM-account, its reputation.
Those who are going to take the first steps and face the problem of selecting a PAMM-account should track the work of such accounts for at least the past 6 months, since the term of one to two months in this situation is not informative and capable of providing a reliable picture. Similarly, it is necessary to pay attention to the current capital of the manager and the amount in management.
Well, if the trader has increased his deposit by 10% - 20% per month. This means that, with further trade, he will continue, most likely, in the same spirit.
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