PAMM

Good evening! As I have promised, we’ll begin studying a new direction of investing our hard-earned money today. Let’s start with honest truth:

PAMM-account (PAMM stands for Percent Allocation Management Module) is a particular trading account for working in financial markets that helps the trust manager to operate his funds and investors’ overall capital.

General scheme of interaction looks like this: manager (trader) – PAMM-account (behind which there is a certain platform) – investor. The point of this total scheme is reduced to one thing: you (investor) register on one of the PAMM platforms (a specialized service, an intermediary between the trader and the investor), choose the PAMM-account you like (using the rating index and manager’s trade statistics) and drop the investment amount you wish there. This is where your work finishes and the manager is involved in the process. His tasks include trading at financial and currency markets with involving your and other investors’ assets. Total profit from the deals is shared between two sides. Mostly, it is shared 50×50, but there can be some departures from the rules which are specified in the offer – an agreement about terms of cooperation concluded between the trader and the investor. The trading interval upon completion of which the “sharing” takes place, is also specified there (as a rule it is 1 month). You can withdraw the earned interest at once or reinvest it, for example, in other accounts, more profitable in your opinion. By the way, if the drawdown happens (the trader goes into the red), both sides suffer losses proportional to their investments. In this case trader doesn’t get profit (due financial reward) until he restores the initial balance.

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It won’t be superfluous to say that that the investor always has an opportunity to withdraw his deposit. That is, being disappointed in this or that trader one can promptly break the unprofitable cooperation and before it’s too late, transfer the remaining amount to a more profitable account. But of course, no one will let you “shaft” the trader just like that, a commission is charged for that service, penalty rate for withdrawal is also specified beforehand in the offer. To make the situation maximally clear I’ll mention main advantages and disadvantages of working with PAMM-accounts:

Advantages:

    An opportunity of getting profit even without any experience and special knowledge. Capital management is devolved to safe hands of experienced traders. Manager also takes part in formation of PAMM-account collective capital, which means he is personally interested in effective trading activity. As a rule, the bigger the trader’s investment is, the bigger trust in his level of competency is. Investor’s funds remain on his trading account, trader only operates borrowed capital and he can’t withdraw it from the PAMM-account. All operations with trading account are available only for its owner. Investor has a right to withdraw funds from the PAMM-account or vice versa increase investment amounts at any time. Distribution of income is done in automatic mode which excludes risks connected with human factor. Manager’s activity is transparent for all investors. You can watch the deals in real-time mode, flip through operation history, etc. Investor can deposit funds in different PAMM-accounts, reducing risks and extending his abilities by that.

Disadvantages:

    Total dependency on the manager (absence of rights and possibilities to step in the trading process to correct and influence financial results). Difficulties in finding a trader. Ratings and public statistics are just the top of the iceberg, it is necessary to learn how to recognize experienced and effective trader. Absence of trader’s responsibility for losing investor’s funds. Distribution of profit is not always beneficial for the investor. If with the old scheme of TM (trust management) the standard shares were 30/70 (trader/investor) then now usual figures are 50/50. Increase of risk of deposit “drain” (total loss). Such danger appears during the process of prompt increase of investment capital on the account. That is, the following thing happens: profitable account/trader attracts many investors and investments and trader’s initial capital gradually loses its value for him. Even if the trader loses, he loses 50% of his own meager amount, but if he wins then 50% of total amount of investments are tens times more than his possible losses. Let’s get back to basics of TM – trader in fact operates only other people’s funds but with 50% reward; more frequent losses of even deposit drain are no longer a serious danger for him.
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Well, in the end I surely can’t skip the most exciting matter – the matter of profit. How much will I earn with PAMM? I must upset you, no one can tell you the exact amount, even the trader himself can’t set at least minimum interest limit. But, after surfing forums and topical blogs I have come to a more or less precise interval: 6-10% monthly. It is concerning traders who conduct conservative policy. Such managers will provide slow but maximally stable growth of your funds. Supporters of aggressive trading can provide 20% and more a month. But the risk of losing your investments sadly grows proportionally to the possibilities of getting such income. Here just like in HYIPs the question of diversification that can balance possibilities and risks comes to the fore; but more on that later. Don’t forget about possible drawdowns; even the cooperation that would seem the most profitable one can’t avoid them. Under fortunate conditions and with correctly chosen trader your yearly income can reach the point of 80-100%. Of course, this isn’t HYIPs where it is possible to get the same amounts during several days. PAMM is a more stable direction where big enough investments are expected. There is also an opportunity of investing small amounts (in some cases from $1), but there is no sense in investing meager amounts at such interest. PAMM is an absolute alternative to a bank where yearly income can hardly cover inflation rate. You need a smart approach to PAMMs and the results won’t make you wait too long for them.

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As an example, I will show you the rating of accounts/traders from one of PAMM platforms. Certainly, only the best managers with the most impressive rates are in this list. Don’t forget that investor’s and trader’s collective income is mentioned in the “profitability” column. The terms of distribution are specified in every trader’s individual offer.

Columns:

Nickname Account number Date of creation Profitability Latest month profitability Relative drawdown Maximum drawdown Details

1 Звезда2 Звезды3 Звезды4 Звезды5 Звезд (Пока оценок нет)
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