This is the most crucial moment in the whole procedure of getting ready for joining the PAMM community. The algorithm doesn’t seem difficult, but to estimate this or that trader’s potential without prejudice and moreover to predict his future course of movement is often impossible and eventually completely contradicts the reality.
But we won’t go deep into the thicket at once; for the start we’ll study the list of standard and compulsory actions that will consequently define the future course of movement of our financial assets. The main criteria while choosing a trader:
- Term of the PAMM account existence. The longer way the trader has passed, the more credibility he has, according to logic, and the more extra information to process you have. It is unreal in principle to predict exactly the profitability of managers with a small personal record. They can show fascinating results during a short period of time (from 3 to 6 months), but only years can show their real skill of situational awareness. Maximum daily level of profit and loss. If the trader supposedly sets the level of drawdown at 50%, you have to think several times before trusting your money to this person, although he is very honest. Amount of trader’s personal funds in a PAMM account. It is a very important factor. A competent and experienced trader’s capital as a rule is measured in thousands or tens of thousands dollars/euros. Let this be a guarantee of trader’s increased responsibility and interest in the outcome of the deal for you. Manager’s offer. Be sure to study the terms of your future cooperation: percentage distribution of profit, possibility of early withdrawal of your deposit, etc. Personal contact. It would be good to communicate with the future manager of your funds via any way of communication, checking his adequacy by that. · Feedbacks and recommendations. It is better to accept recommendations from people you trust who have already experienced all the advantages of working with this or that trader. As almost all topical forums are full of feedbacks, you can start directly with the forum of the PAMM platform you have chosen. · Appetite for risk. The less the difference in values of profits and losses for a certain period is, the more stable your future cooperation is. Watch your manager’s trading dynamics: the more evenly his daily income distributes during the whole period of the PAMM account existence, the clearer the predictions concerning your future will be. But you shouldn’t forget that uneven charts in particular will be able to provide you with such profit that is beyond conservative traders’ power. That’s what a familiar to us conception of diversification is for. But we will talk about this later. Experienced investors advise to join the account when the profit chart is in the decline stage. As it is known from the cyclical theory, there is a rise after every decline. That is, the probability of a significant drawdown right after the appearance of one, is minimized. If it is possible, use the services of several distribution centers at the same time. It is useful to diversify your funds not only amongst different accounts, but also amongst different PAMM platforms. This will keep you safe from potential loss of your total capital in case the PAMM service organizers start foul play. This rule especially concerns major investors.
All information about traders including the possibility of monitoring their behavior in market, is in ratings of PAMM accounts provided by PAMM platforms. We will learn the process of analyzing a manager’s activity in detail in one of the following articles. Be successful together with GIO.