Analysis of a PAMM-Account. Basics

I decided in favor of one of the winners of the trader competition of 2010 held by Alpari company. For those who have already watched a piece of a video conference with three claimed leaders, today’s lesson and my choice will be clear. I watched all 3 parts of that Club day, and after that the received megabytes were arranged in pigeonholes…

Angelika is the first heroine; she doesn’t have her personal PAMM-Account which initially excludes her from the list of objects we are interested in. In addition, her constant references to her appetite for absolutely unjustified risk don’t really inspire for cooperation. 100% deposit upload, according to her is not a rare thing. In addition, there was evidence of absolute drains of this heroine at forums, when thousands conventional units disappeared from the account within one-two days.

The second hero is Nikolay Popov; it turned out that he had drained all accumulated capital in August and his account at the PAMM platform was closed down. What is more, he did it literally within 2 weeks. Investors didn’t have time to blink. During last months of his activity there was no sign of promised conservatism – here is “the best” trader and “stability” of strategy. This is a good example of how 1.5 years of “successful” trader’s activity can disappear together with your money within 16 days:

On the basis of these factors, the choice is made automatically – Aleksey Mahonin, whose account we’ll study today. Mahonin seemed the most stable applicant to me while I was watching the video; and he was maximally matching my criteria compared to other participants. Trader’s PAMM-Account didn’t disappoint me either. I won’t get to the objective estimation and predictions of this trader at once, we need to learn how to study an account at once. I think many people would agree with me.

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Let’s begin!

Tab: “General information”

The orange line shows account profitability during the whole period of its existence. The blue line is share price (share price = profitability + 100).

We analyze the following information:

1. “General information”:

    Holder (mahonin) – is the nickname of the PAMM-Account holder in the Alpari forum. You can contact PAMM-Account holders with a private message in the forum and ask them to describe their trading strategy or offer to cooperate with them in a Partnership program.
    Description (Trend trading) – is a short description of a PAMM-account (and any additional information from the Manager about their strategies and the PAMM-Account in general).
    Date activated (published) – 24.11.2008 – is the date when the Account was officially open.
    Currency (USD) – is the currency in which the PAMM-Account is denominated (conversion during PAMM-Account fund investment takes place automatically, based on Alpari’s internal rates).
    Manager’s capital ($5000) – is the public investment of a PAMM-Account Manager (available for Investors to see); the funds the Manager transfers to their personal Manager’s Account which serve as a guarantee that they will act in the interests of Investors; the remainder on the PAMM-Account in the event that Investors withdraw all of their funds. The greater the Manager’s Capital on a PAMM-Account, the greater the amount of the Manager’s funds are at risk, in comparison with other Investors.
    Planner – is the schedule of active rollovers on the PAMM-Account, established by the Manager (including the times when requests will be fulfilled for fund deposit/withdrawal and the closing of Managed accounts.

2. “Proposals”:

    Minimum deposit (10 USD) – is minimum subsequent deposit (after initial deposit).
    Minimum withdrawal (3 USD) – is minimum amount allowed to be withdrawn.
    Balance (USD) – is the amount of your investment in the PAMM-Account.
    Manager’s Remuneration (50×50, 45×55, etc.) – is the percentage of Investor’s income that will be paid over to the Manager during the distribution of income in the end of the Trading interval. In this case manager’s remuneration percentage reduces proportionally to the increase of deposit size.
    “Refer a friend” (0) – is a remuneration for the promotion “Refer a friend”.
    Undisclosed Period (Always) – is a certain period of time during which Investor can’t watch Manager’s deals.
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As a rule, there are other items in a standard offer; I will publish them in a PAMM Investor’s dictionary one of these days.

3. “Indicators”:

    Current Profit (275.89%) – is a value that corresponds to the last point of PAMM-Account monitoring line.
    Maximum Relative Profit (346.29 – 09.03.2011) – is the value that is counted from minimum to maximum point on the PAMM-Account monitoring line. This is the maximum that Investor could earn within the whole time of PAMM-Account existence.
    Maximum Relative Loss (34.95% – 05.05.2011) – is the value that is counted from minimum to maximum point on the PAMM-Account profitability line. This is the maximum that Investor could lose within the whole time of PAMM-Account existence.
    Maximum Daily Profit (64.65% – 07.05.2009) – is the maximum value of daily profit.
    Maximum Daily Loss (21.37% – 03.05.2011) – is the maximum value of daily loss.
    Average Daily Profit (1.17%) – is an arithmetical average value of all daily profits above zero.
    Average Daily Loss (-1.12%) – is an arithmetical average value of all daily losses.
    Daily Profit Volatility (1.15%) – is an arithmetical average value of all daily profitability (profits and losses) modulo.
    Recovery Factor (6.15) – is a relation of current profit to maximum relative drawdown. It indirectly tells about system’s reserve to recover its positions after a drawdown (the higher, the better, of course).
    Aggressiveness of Trading (4 of 5 – high) this parameter is counted on basis of maximum daily profit and maximum daily loss.
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Tab “Rate of Return and Exposure”

“Deposit upload” – is a parameter that allows to estimate:

    risk level. Upload is the amount of borrowed money that trader uses in his trading activity. 100% rate of upload shows that the trader uses the whole credit, that is he trades an amount of money that 100 times more than his own capital in the account. 10% rate of upload shows that the manager trades the amount which is 10 times more than his own capital in the account. This is so-called leverage and it significantly increases possible profits and losses. Using of 100% upload for a long time guarantees total drain with almost 100% probability. The less upload rate is, the less risks the manager takes. trading dynamics. Analyze both profit and upload charts. If from the time of account activation to current days the rate of account upload is approximately at the same level, then published account productivity can be considered maximally unprejudiced. And it means that you can count on relative stability of your income at the level that the trader has been showing for all this time. Upload surges only lead to the increase of unpredictability rate of your future cooperation.
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