PAMM INVESTING IN GENERAL

Updated: 03/04/2011 21:41
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Good evening! As I have promised, let us begin today to study a new stream to deposit our money. Let's start with the dull truth:

PAMM ? account (engl. A percent allocation management module, or PAMM, which may also be referred to as percent allocation money management, describes a software application used predominantly by foreign exchange market brokers to allow their clients to attach money to a specific trader managing one or more accounts appointed on the basis of a limited power of attorney)

The general scheme of interaction: control (trader) - PAMM ? account (for which there is a definite PAMM-ground) ? the investor. The essence of the whole scheme add up to one thing: you (investor), register on one of the PAMM-platform (a specialized service, the intermediary between the trader and investor), choose PAMM-account you like (using the performance rating and manager's trading statistics) and throw there the desired amount of investment. This completes your job and from now the process leads by manager. The task is to trade in financial and currency markets with the assistance of your capital and capital of other investors. All profit extracted from the transaction shall be distributed between two sides. In general, the distribution is made in accordance with 50-50, anyway there are deviations from the rules that are specified in the offer - an agreement on terms of cooperation signed between the trader and investor. Also, there is indicated and the trading interval (usually 1 month), upon the expiration of which "sharing" take place. You can immediately withdraw the earned interest, or reinvest, for example, into other more profitable in your opinion accounts. By the way, if there is a drawdown (trader goes to minuses), the losses are borne by both parties, in proportion to their investments. In this case, the trader have no a profit (the position of monetary reward), until he restore the original balance.

Not be amiss to say that the investor may always withdraw his deposits. That is to say, disappointed in one or another trader, you can quickly break the unprofitable cooperation and if it is not too late - to transfer the remaining amount to more lucrative account. Anyway, no one will let you to "cheat" the trader simply because nobody else will, for this service owed the commission, the amount of the penalty for withdrawal specified in advance in the offer. To clarify the situation, here are the main advantages and disadvantages of working with the PAMM-accounts:

Advantages:

  • The possibility to get an income even without any experience and special knowledge. The management of capital goes into safe hands of experienced traders.
  • The manager also participates in forming a collective capital of PAMM account and that means he is personally interested in an effective commercial activity. As a rule, the higher deposit of the trader, the higher is trust towards his level of competence.
  • The investor's funds are kept on his trading account, the manager manages only a borrowed capital and can not take funds from the PAMM account. All operations with the trading account are available only to its owner.
  • The investor has the right at any time to withdraw funds from the PAMM-account or vise versa to enlarge volume of investments.
  • Distribution of profits is made in the automatic way, eliminating the risks associated with the human factor.
  • Manager's activity is transparent for all investors. You can spectate deals in real time by browsing the history of operations etc.
  • Investor is also managed to invest money in various PAMM accounts, thereby reducing risks and enlarging his own abilities.

Disadvantages:

  • Full dependence upon the manager (the absents of rights and possibilities to enter the trading process in order to correct or influence on financial results)
  • Hard to find a trader. Rankings and public stat that is only the tip of the iceberg, you need to learn how to define experienced and effective traders.
  • The absents of trader's responsibility for the losses of investor's money.
  • Sharing the profit is not always beneficial for the investor. If dueto the old form of Control (asset management) standard aspect ratios have been considered: 30/70% (trader / investor), then, as for today they are familiar to 50x50.
  • The growth of risk "drain" (complete loss) of the deposit. This kind of threat appears in the process of rapid increase of an investment capital on the account. In other words the next thing happens: profitable account / trader attracts a large number of investors and accordingly of investments and so the initial capital and the trader gradually begins to lose its value for him. Even if the manager loses, he loses 50% from his miserable sum, but if he profits, then the 50% from the general dump of deposits in ten times cover potential losses. Back to the roots of Control ? trader actually trades only other people's money, but already with 50% of reward, more frequent losses or total loss of deposit cease to be a serious danger for him.

Well, in the end, sure thing I can't miss the most exciting issue, which is income. How much will I actually be earning on PAMM? I must disappoint you, no one will say you the exact amount, even the trader is unable to establish at least the minimum percentage limit. But after visiting numerous forums and thematic blogs I more or less came to an unambiguous interval of 6-10% per month. That is what about the traders, who pursue a conservative policy. Such managers will provide a slow, but the most stable growth of capital. Followers of aggressive trade may make up to 20% per month and more. But the risk of capital loss, unfortunately grows proportionally to opportunities to receive such revenue. Here, like in HYIPs pops up the question of diversification that can balance the opportunities and risks, but more on that later. Don't forget about the possible drawdowns, even the most profitable co-operation we can not imagine without them. Under favorable conditions and the correct specific trader your annual income could easily reach $ 80-100%. Of course, this is not HYIPs, where such amounts can be acquired for a few days. PAMM - it is much more stable, calculated on a fhonest large investment, direction. There is an opportunity to invest also a small amounts (in some cases - up to $ 1), but under such percentage it is simply makes no sense. PAMM - this is an absolute alternative to the bank, where the annual percentage of time just cover the inflation. The Pamm needs a personal approach and then the results will not keep you waiting.

As an example, I will show you a rating accounts / traders with one of the PAMM-sites. In the list, of course, only the top managers with the most impressive performance. Do not forget that in the column "yield" indicates the total profit of the investor and manager! Terms of distribution specified in the individual offer for each trader.

 


About the author

Brett Sherpan has been working for seven years writing and editing for online and print media. He has held various editing and copywriting positions and can quickly and competently write copy for sales, marketing and editorial content. Brett is a consistently dependable team player, who thrives in a high-pressure environment, enjoying the challenges of meeting deadlines and am comfortable researching, writing and editing on a wide range of topics
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