Investing in PAMM accounts is one of the best passive income opportunities for those who do not want to spend their own time studying strategies and tracking events that can affect the profitability of investments. This method is also convenient for novice investors, as it does not require prior knowledge and significant experience in participation in foreign exchange trading.

What is a PAMM account

PAMM accounts got their name from the English "PAMM", an abbreviation that means a percentage distribution management module. In the most general terms, the system can be described as the transfer of funds to a trader for trading on the international Forex currency exchange.

The manager, who has some experience in the foreign exchange market, opens an account on the Forex exchange with the help of a broker (dealing center), after which he attracts investors who will transfer their finances to him for trust management.

As a result, money from many investors is collected on a single balance sheet, which the trader then uses to buy and sell currencies. The difference from other methods of investing on the Internet is that any trading means are available to the manager, he does not report to investors about upcoming operations and does not have to obtain permission for them - this greatly simplifies the work and contributes to greater profits.

At the same time, investments in PAMM are protected from theft, because the trader cannot use them otherwise than in trading operations. Thus, the investor is protected from the possibility of withdrawal and theft of money by the trader. The terms of investments, the percentage of profit received by the trader, the rules for withdrawing funds, and other details are negotiated by an offer - an agreement concluded between the investor and the manager.

After receiving the profit and deducting the interest paid to the manager in accordance with the agreement, the funds are distributed among all investors according to their share in the total capital.

We have invested part of the capital in these projects:

Investment Example

A trader working on Forex independently receives a monthly average profit of 5%. In this case, when investing personal $ 1000, the yield will be $ 50. The same strategy does not limit the volume of transactions, but the increase in capital increases profits accordingly. Therefore, opening a PAMM account allows you to attract money from third parties and use it in trading operations.

It turns out that if two investors decide to invest in PAMM accounts, the total amount of funds increases. $1,000 came from the first, $3,000 from the second. Given the investment of $1,000 of the trader's own money, the total amount of money will be $5,000.

If the average yield remains the same at 5%, the profit per month will already be $250. The average percentage of the manager's remuneration prescribed in the offer is about 40%, which are deducted from the total earned amount, and the remaining money is distributed between the two investors in accordance with the amount invested in the turnover. The distribution result can be viewed in the table below:

If the results of trading do not bring profit, losses are distributed between investors and the trader in the same way - in accordance with the percentages that form part of the total account. This leads to a greater interest of the manager of the success of the trade.

Benefits of investing in PAMM accounts

Before the advent of such a scheme, the depositor and the trader worked directly, the first was forced to provide the second with access directly to his trading account. In this case, the trader could only be interested in an account with significant investments - managing small amounts took a lot of time compared to the possible profit, so the entry threshold was too high.

The second option for cooperation is the transfer of money directly to trust management. Trading with this approach could not be checked by the investor in any way, and the manager had the opportunity to use other people's money, which led to facts of fraudulent actions.

Investments in PAMM accounts are free from the disadvantages of the described methods and have the following advantages over them:

• The account is opened on the site of a broker, who acts as a guarantor, both to the trader and to the investor, in compliance with both of their obligations.
• It is possible to access the history of the movement of finances on the account, access to the statistics of each of the managers is also provided by the brokerage company.
• The funds received from investors can only be used in the process of trading; the manager is not able to withdraw them on his own.
• Convenience in terms of diversification - the final balance can be replenished once, and then the entered finances are distributed among different managers, provided that they work on a single platform.
• The risk of losing investments is not only for investors, but also directly for the traders themselves - they must invest their own money in PAMM accounts, a small percentage of the manager's funds becomes a negative factor for an experienced person, in which case it is extremely difficult to attract money.
• PAMM brokers strive for convenience, so ratings are compiled based on a quick search for a trader.
• The process of entering the trade does not require coordination and lengthy negotiation of conditions - it is enough for a potential investor to familiarize himself with the terms of the offer and confirm agreement with them by pressing one button.

The general advantages that investments have include the following factors:

• Low entry threshold - you can start investing as little as $10.
• Any possibility of fraud is excluded - the manager has no other access, except in the process of trading, to the money on the balance sheet, both to initial investments and to profit.
• Investing in a PAMM account, unlike most other methods, does not require specialized experience and special knowledge - to make a profit, it is enough to choose the right manager and correctly distribute investments.
• Money can be withdrawn at the request of their owner at any time convenient for him, the operation does not require waiting or ordering in advance.
• Trader's actions can be tracked from the personal account and analyzed.
• The manager faces risks not only of losing his own funds, but also of his reputation - poor performance will alienate other possible co-investors from him.
• The choice is facilitated by the simplicity and accessibility of settings - a person can select PAMMs, whose managers use different strategies, receive different income and play with different degrees of risk.

The only negative is the risk of losing money, but this is a property of almost any investment, especially those based on the human factor. The danger can be minimized by a serious attitude to the choice of a manager, an analysis of the strategies used by him and other indicators.

Diversification is the main principle of professional investments

The basic rule that is mandatory for investment is risk diversification. It must be applied at the stage of preparing investments. This concept includes both the investment of money in PAMM and their distribution among various managers.

You should not invest all the money intended for investment only in PAMMs, they should account for no more than 40% of your investment portfolio.

You can avoid losses from potential risks as much as possible and get the greatest profit when money is transferred not to one, but to several managers. At the same time, it is worth analyzing the strategies that they use in trading and choosing players who use different methods.

Some brokerage sites offer effective assistance in compiling a PAMM portfolio that can increase overall profitability and reduce the risk of losses. Another type of diversification is the division of money by sites and currencies traded.

Types of PAMM investment strategies

All existing strategies are divided into three types and can be conservative, moderate and aggressive. To find out the strategy used by a particular manager, you can view the following indicators:

1. Deposit load - determines the percentage of money at risk in relation to the total invested amount of the account.
2. Drawdown - losses measured as a percentage of the total amount collected in the account.

An aggressive strategy brings the highest returns, but also carries the greatest share of risk. Shows the following indicators:

1. Profitability - not less than 10% per month and more than 120% per year.
2. Drawdown - from 50%.

Moderate accounts with medium returns and risks:

1. Profitability - 5-10% per month, 60-120% per year.
2. Drawdown - 30-50%.

A conservative strategy with low risks and returns:

1. Profitability - about 5% per month, for the year - 60%.
2. Drawdown - no more than 30%.

These parameters and characteristics can be seen in the indicators of the PAMM account in which it is planned to invest.

Selection rules

In addition to choosing a strategy, you will need to study a number of specific factors:

Trader experience

The lifetime of the investee makes it possible to better analyze the information. It is advisable to invest in PAMM, which is at least 12 months old. During this time, the manager should have at least one drawdown - his reaction to losses will show the ability to cope with the difficulties that have arisen. Otherwise, you may encounter a situation where, during the first drawdown, a person drains all available funds.

You can find another PAMM operated by the same trader - it will demonstrate the profitability and style of work, and if the money was drained, it will provide an opportunity to see the reason for the failure.

Drawdowns

Inevitable drawdowns in work allow you to decide what level of risk an investor can expect. You can choose the offer, the level of drawdowns of which you can afford: someone decides to take money with a drawdown of 20%, for another, even 50% does not become a reason for withdrawing funds. The best option: a maximum drawdown of 30%, the exit from which lasts no longer than 2 weeks.

Yield

It is worth paying attention not so much to the monthly profitability, but to the indicator for the entire time of work. Another characteristic is the change in returns throughout the trade.

Equity capital

It is better to invest in a PAMM account, the manager of which attracts large own funds - the higher his own risk, the greater the interest in increasing profitability. The trader's capital should not be less than $1,000.

Total amount under management

The more money is given to the "disposal" of the trader, the higher the confidence in him. Other investors also analyze the strategy and ways of managing money, and if they decide to invest, then such a check has justified itself. Conclusion - the larger the total amount, the more reliable the investment.

Rating

Brokerage companies provide an opportunity to use such a tool as the rating of managers, in which they are ranked from best to worst. It is advisable to look for data for a contribution in the top twenty.

Creation of a PAMM portfolio

Based on the foregoing, a PAMM portfolio is a set of different accounts in which money is simultaneously invested. This is one of the principles of diversification that allows you to increase profitability and reduce the risk of losses. You can make a portfolio yourself or invest in one that was prepared in advance by the manager.

Self-selection of a portfolio

Most dealing centers provide an opportunity to use a financial instrument called a PAMM account constructor. Thanks to him, you can choose the accounts that are added to the portfolio. Funds are distributed after it is drawn up, and the principle of investment depends on the degree of risk tolerance and the desired return. For example, a lot of money goes to managers with a moderate strategy, and the remaining money goes into management in aggressive accounts.

Ready portfolios

Such portfolios are compiled by the managers themselves and include the most reliable, in their opinion, options. A trader can invest himself in portfolios created for investors - this demonstrates a serious approach to choice. After new investments are made in the accounts included in the portfolio compiled by the manager, he receives remuneration from their owners.

Investment Tactics

In addition to choosing PAMM accounts, you should adhere to certain tactics for working with them. The following tools are used for this:

Loss limit

Most brokerage platforms provide the ability to automatically withdraw funds in case of losses that the investor begins to bear. Such a tool allows you not to track events, but to set an acceptable risk limit, the excess of which automatically withdraws money from the account.

Reallocation of funds

After the end of a certain period, funds are redistributed between accounts in accordance with the previously selected scheme. An aggressive strategy allows you to achieve a larger amount of funds in the account, but can lead to a drawdown, as a result of which most of them will be lost. Transferring money to a moderate account will avoid the risk of losing your investment.

Investment horizon

Differs from redistribution in that funds are transferred from aggressive measures to moderate strategic actions or conservative PAMMs not partially, but completely. The more aggressive the strategy, the less time should be kept in the work of the profit.

"Cleaning" the portfolio

Accounts that are consistently losing money should be removed from the portfolio and replaced with new ones.

In conclusion, we can say that investing in PAMM accounts becomes a reliable method of obtaining passive permanent income in case of choosing the right successful traders, compiling a portfolio and adhering to the right investment tactics. This is the key and the only factor on which the profit received by the investor depends.

Video lecture from an expert:

Similar posts

Hello blog readers! The work of an investor is largely a game of prediction: will the price chart rise / fall in the future? And when it comes to money, it's very easy for a person with no experience to "get on the wrong horse" and lose their investment, and this can happen within one day.

Recently, the idea has come up to analyze leaked PAMM accounts to understand what they have in common. I wanted to find out for what reasons significant amounts of investments of investors are lost - and tell you about it!

If someone is not in the know, drain PAMM accounts are a sharp drop, up to -100%, which essentially leads to the loss of deposits of all participants in the process. Here's what it looks like:

Imagine for a second that there is no collapse yet, how do you like the schedule?
Beauty indeed! And such a "setup" in the end ...

Happy reading! At the end of the article, you will learn a little to predict the future :)

Before moving on to the content of the article, I suggest subscribing to my channel in Telegram. Subscribers receive additional information that is not on the site: notes on various topics, weekly reports, news reviews, answers to readers' questions, polls.

Statistics on merged PAMM accounts

For analysis, I selected 50 PAMM accounts that were closed in 2017-2018 due to a drain. The sample is not to say that it is large, it will not pull on a fundamental scientific article, but in order to draw certain conclusions it is quite enough. PAMM accounts were quite popular among investors - the investment mark reached at least $ 15,000 or the equivalent amount in another currency.

I collected all the collected information in an Excel file that you can download.

Before moving on to analytics, I would like to offer you some generalized statistics. For example, there is an opinion that the higher the capital of a manager, the more responsible he is in his work, which means that the probability of draining is lower. And here's what the situation really is:

The number of merged PAMMs depending on the capital of managers

As you can see, larger amounts of guarantees do not give any. And this is not surprising - the mark of $ 3,000 allows the manager to reach the upper echelons of the rating in Alpari, which means to attract more investors and reach a plus even with more serious investments.

The second interesting point that I wanted to check is how long do the accounts that merge as a result usually live? In some ways, this echoes my article about search, where we looked at how many “survivors” remain after 3,6,9,12 months of trading. And today we look at the number of "dead":

The number of merged PAMMs of different ages

I explain the graph: the left columns are the number of merged accounts, the right columns are the number of accounts in general in the age segment (numbers are percentages of the total). And this is what we see:

• half of the merged PAMM accounts did not last even half a year, although it should still be noted that 2/3 of the accounts are, in principle, less than six months;
• in the period from 7 am to 12 pm and especially from 1 pm to 6 pm, the number of drains significantly exceeds the share of PAMM accounts in general in this segment;
• PAMM accounts with an age of 18 months or more merge much less often, despite the fact that their share reaches 20%.

In general, nothing unexpected - the old PAMM accounts do not merge because they use less risky trading strategies that allow you to stay afloat for a long time.

In fairness, I must say that draining a PAMM account is not always so bad. Some ymeltsy manage to disperse their accounts to hundreds and thousands of percent yield. Thanks to them, you can earn a lot of money using the principle, but this is risky and often ends badly. It is worth using "drain" PAMM accounts only with timely withdrawal of profits, when the loss of the initial deposit no longer plays a big role.

The higher the monthly yield, the faster the end of the PAMM account will come. This relationship is confirmed mathematically - it is -0.4, that is, there is a strong inverse relationship. The reverse is also true - the lower the monthly yield, the more reliable the PAMM account. All this is perfectly demonstrated by the graph:

The ratio of profitability of PAMM accounts and the time until they are drained

PAMM accounts on the left side of the graph "live brightly and die quickly." In fact, this is roulette - but you can earn money on it with due luck. In order to last longer than a year, managers have to moderate their appetites and trade with a smaller lot, but drains still happen, because over-profitability is just one of several signs of a dangerous PAMM account, after studying the list, I can definitely say that there are others.

Signs of potentially draining PAMM accounts

The first thing you should pay attention to is the chart used, it is located on the "Trade" tab on the official page of the PAMM account. Looking at this chart, you can see several signs of a possible drain in the future.

V 80% In cases of merged PAMM accounts, there is a noticeable imbalance on the ICP chart, there are jumps from 10-20% to 100% and higher:

In many cases, these jumps are due to the use of , which itself leads to a drain in 100% of cases.

Slightly less likely 76% there is such a sign - the used leverage at least once exceeds 100%. In practice, this means that the manager has at least once put his PAMM account in a "make or break" situation - when survival actually depends on luck.

On the 36% of merged PAMM accounts, there is a rather dangerous trading technique overstaying- when, with losses, the manager does not close the deal in a minute, but sits in it for days, weeks, sometimes even months and waits for the price to turn in the right direction. This often works, but not always - and then the losses can be fatal:

The usual PAMM account yield chart gives quite a bit of information about the potential risks of a drain, but there is one case where the sad end is obvious - straight line chart practically without drawdowns (may turn up a little at a yield of 1000%+). This sign met y 40% PAMM accounts:

A couple of times I met a similar scheme, only the trade does not go on all the time, but once every few days, so it turns out not a straight line, but a “ladder”:

Another sign that is often found on merged PAMM accounts is an empty declaration, in 46% cases:

In my opinion, this can mean two things:

• the manager does not take his job seriously or is not a professional - informing investors is an important part of his job;
• the manager knows that the account will be drained sooner or later and sees no point in making promises that will be broken.

The last and rather obvious sign remains - if there are at least a few merged PAMM accounts in the manager's archive. Over the past year, comrade TOPMASTER excelled the most - 9 merged accounts with investors' capital of $15,000+ and as many as 135 in the archive :) According to fastpamm.com, the trading result of this manager is minus 511 thousand dollars!

By the way, a negative result in trading can also be a sign of the use of dangerous strategies. I did not specifically check for this article, but this may well be true, so I give you a tip.

textbook plums

If ever a textbook on investing in PAMM accounts is written, this section will be there, because you need to study history in order not to make mistakes in the present. This also applies to investment.

Homework

Since the article is not only about analytics, but also about, I give the opportunity to consolidate knowledge. Complete the task:

Draining a PAMM account with investors' money is not a fun event, and it happens almost every day. And when the markets are in chaos, tens and even hundreds of thousands of dollars can be lost in a day. Someone may consider this an acceptable risk when investing, someone may not, but the main thing is that the investor clearly understands that such a situation is possible.

Let's go over the main signs of potentially draining PAMM accounts again:

• super profitability;
• fluctuations on the chart of used leverage;
• use of ICP 100% and above;
• sitting out losses;
• graph straight line or ladder;
• empty declaration.

I recommend going through your PAMM portfolio and checking if there are any potentially draining PAMM accounts in there - maybe you go to remove them or reduce the share in the portfolio. At the same time, please vote:

1
In my opinion, the article turned out to be interesting and useful :) If you think the same, then I ask you to tell your friends about it on social networks:

For you, this is a minute of business, and for the blog it is a good help in development and stimulated me personally to make new interesting articles for you.

Well, it seems to have said everything :) Profit, comrades!

(add me to friends

Greetings, guests and readers of the blog! The past year was marked by important events for Russian Forex traders. The license of the Central Bank was received by two brokerage companies: Forex Club and Alpari.

This means that the process of formation of a civilized forex in Russia is underway. It is possible that the result will be a new increase in the popularity of this type of income. Therefore, we will from time to time analyze the popular questions of beginner Forex investors. Today's question is: "PAMM accounts - what are they?"

The name PAMM is a transliteration of the English abbreviation PAMM from Percent Allocation Management Module (percentage allocation management module). The title clearly needs clarification.

In simple words, PAMM is a solution in which a trader (he is called a manager) offers those who wish to become investors to receive profit in proportion to the share in the total capital of the account

This offer, which lists the conditions for investors, is called an offer. A typical offer may include the following sections:

• Account currency
• Percentage of manager's remuneration (usually depends on the amount invested)
• Minimum investment amount
• Conditions under which withdrawals may be temporarily frozen

For his services, the manager receives remuneration from investors. Typically, the manager's remuneration is in the range of 30-50% of the profit: the higher the invested amount, the lower it is.

In addition, the brokerage company on the basis of which the account exists provides statistics that reflect the profitability for the selected time interval, maximum drawdown, account age, and some other parameters.

This statistic is used by potential investors to select the best manager from their point of view.

Are those who talk about deceit right?

Not all forex brokers provide PAMM platforms. Among the most famous, it is worth mentioning Alpari, InstaForex, Forex4you.

Unfortunately, all these companies provide too limited information as part of the rating of their PAMM accounts.

New investors tend to be clueless and think that yield, maximum drawdown, and account age are just about everything you need to know to make an investment decision. Now you make sure that .

Imagine that some account shows a "ladder" of profitability: a month with a profit of 10% is replaced by a month with a loss of 5%. Then the annual return will be 30%. If the manager's remuneration is 50%, it may seem that the investor will eventually receive 15% per annum.

Nothing like this! For a profitable month, he has half the profitability of the account, i.e. 5%. During a losing month, he loses these 5%. This will be repeated constantly, and at the end of the year he will be without profit.

It is very likely that this investor will “check in” on one of the forex forums, where he will leave his.

However, there is no cheating here.

The distribution of profits and losses between the investor and the manager does not always leave the investor with the opportunity to make a profit. Alas, the rating systems of PAMM accounts adopted by forex brokers do not reveal some mathematical details.

There is a way out of this difficult situation, but the investor needs to know something else beyond the available information. This additional information is the ratio of the average monthly return of the account to the downward risk, called the Sortino ratio.

Without going into details, we can say that the Sortino coefficient serves as a measure of the stability of the account, the uniformity of its growth. The higher this indicator, the higher the investor's chance to make a good profit.

This information is not provided. True, there is one exception. Alpari partners have created a site pammin.ru with extended statistics. The proposed set of parameters has absolutely everything that an investor needs.

Pros and cons of investing in PAMM

The emergence of PAMM accounts has become a very important event in the development of trading in the forex market.

This is by far the simplest and most effective investment opportunity for those who do not have a lot of capital to enter into a contract with a professional asset manager. At least that's what most newcomers think when they're wondering where to start their journey to millions.

No experienced trader will be interested in $100. At the same time, smaller amounts can be invested in PAMM. Another important detail: a brokerage company that has its own PAMM platform acts as a guarantor of the investor's interests.

For example, if a trader turns out to be a fraudster, he will not be able to appropriate investors' money thanks to a simple mechanism: the manager's own capital and the profitability of the account are known. This means that the manager has a specific amount at his disposal, which belongs to him personally, but not a cent more.

But, like any type of investment, they carry a potential risk. It is connected mainly with the fact that even the most effective manager is not immune from mistakes.

High returns in the past are no guarantee of the future. Therefore, if funds allow, it is much safer to form a portfolio of deposits in several PAMM accounts with different management strategies.

There are also risks associated with unscrupulous forex brokers, from time to time there is information about the closure of another “kitchen” that is not available for interbank trading.

To date, investing in PAMM accounts is the most affordable type of investment in Russia. And its popularity is due to the ease of opening an account with a broker.

It is interesting that this direction is almost unknown in foreign forex, because. the legislation of a number of countries prohibits the management of assets without a special license.

One of the rare non-Russian PAMM platforms is the eToro social network for traders, which also provides brokerage services.

eToro has been a partner of Sberbank since 2016. However, the company's new project called ETORO-INVEST (a service for the formation of a highly profitable portfolio from PAMM accounts) and reviews about it do not inspire confidence.

Afterword

It's not the first time I talk about this topic. But, judging by the statistics of search queries, interest among novice investors is only gaining momentum.

More experienced investors, having played enough with pseudo-investments, are gradually moving to real professional instruments - securities.

And all because, in fact, the threshold for entering the stock market is not so high. You can buy your first block of shares for a couple of thousand rubles, and bonds are available from 1000 rubles. a piece. Add here and now it has become possible to get practice in a simple and accessible form without worrying that tomorrow your broker will disappear taking your deposit. And this is a separate large and important topic.

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Understanding investing in PAMM accounts

Investing in PAMM accounts - what is it?

• PAMM account - what is it;
• Investing in PAMM accounts for dummies by example;
• What are PAMM platforms brokers;
• How to choose a PAMM account in the rating;
• The best and most reliable PAMM accounts;
• Monitoring of PAMM accounts.

I hope that after reading this article, the process of investing in a PAMM account, even for complete dummies, will become clearer and easier. First, let's talk about what PAMM accounts are and where they came from.

I have been blogging for over 6 years now. During this time, I regularly publish reports on the results of my investments. Now the public investment portfolio is more than 1,000,000 rubles.

Especially for readers, I developed the Lazy Investor Course, in which I showed you step by step how to put your personal finances in order and effectively invest your savings in dozens of assets. I recommend that every reader go through at least the first week of training (it's free).

The PAMM account service (abbreviation PAMM - Percent Allocation Management Module - percentage distribution management module) is a system for the percentage distribution of profits and losses between the manager and the investor. In other words, a PAMM account is one of the types of managed Forex trading accounts, where the managing trader has the opportunity to use attracted funds from investors in trading.

Investing in a PAMM account is available automatically, and profits and losses are distributed among investors and the manager, depending on the percentage that the managing trader set in the manager's offer. In simple terms, an offer is an agreement that regulates the relationship between a trader and a manager (read the details in). Profit or loss resulting from the manager's trading activities is distributed among investors in proportion to the amount invested.

Investments in PAMM accounts for dummies on an example

For clarity, let's consider the work of investing in a PAMM account using an example. Let's say that a trader trades in the forex market with a deposit of $1,000 and an average return of 5% per month. The profit in this case is $50. The Forex currency market allows you to trade on the same strategy with almost any volume. This means that with the same profitability (in our case, 5% per month), having a large trading capital, a trader can receive a significantly larger profit.

At some point, our trader makes a willful decision to open a PAMM account and start using attracted funds from investors in trading. Imagine that 2 investors decide to invest in this PAMM account at once. The first invested $1000 and the second $3000. The total amount of funds to the accounts in this case will be $5000 (1000+1000+3000).

With an average yield of 5%, the total profit on the PAMM account will be $250. When creating an account, our trader, in the offer, set the percentage of the manager's remuneration at 40%. (average statistical value). This means that for managing the attracted capital, the trader will receive 40% of the investors' profit. In the table below you can see the profit distribution in our PAMM account.

I think that comments on the table are unnecessary, it can be seen with the naked eye that the use of PAMM sites is beneficial for both the trader and investors. All losses are distributed among the manager and investors in the same ratio as the profit, and in this case the manager does not receive any remuneration.

Before the advent of PAMM platforms, forex investors were forced to work with the trader directly, by providing a password to access the investor's trading account. Or transfer the invested amount directly into the hands of the trader. The first method involves the need for the investor to have a decent amount under management, because. a self-respecting trader will not take control of an account with a balance of $100. With the second method of alternative investment in PAMM accounts, there is a high probability of fraud. It was this scheme that worked most of the succumbing projects, such as VladimirFX, Gamma IC, etc...

Speaking about what PAMM accounts are, one cannot fail to mention the advantages over the methods described above:

• A PAMM broker acts as an independent guarantor of the fulfillment of the obligations of both the trader and the investor. This leads to the following advantage.
• PAMM broker provides real history of PAMM account. We can say that the brokerage company, providing access to the statistics of the manager, acts as an independent PAMM monitoring
• The manager cannot take and leave with the investors' money. The capital of investors, although it goes into the management of the trader, but he will not be able to withdraw it.
• Convenience of investing in PAMM accounts of various managers on one site. An investor can replenish the account only once and distribute the amount among several managers.
• A trader risks not only the money of investors, but also his own capital. Thanks to PAMM brokers, any investor can see the amount of the manager's capital. Managers who have too little equity on their trading account are avoided by experienced investors.
• Convenience of choosing a PAMM account in the broker's rating. Thanks to PAMM brokers who have developed convenient interfaces for ratings and filters, choosing a manager can take just a few minutes.
• Saving time on coordinating the details of investing in a PAMM account. The investor does not need to correspond with the manager and discuss the terms of investment, this process comes down to pressing one button.

Forex PAMM brokers

In 2008, Alpari developed a system for investing in PAMM accounts. It was Alpari that became the first PAMM broker, after which the major players in the forex market began to copy this investment scheme. I will list the best PAMM sites in my portfolio:

• PAMM broker Alpari ()

The company was the first to develop and implement a PAMM system for its clients, which is why Alpari has the largest selection of PAMM accounts among brokers. on the Internet are very different, the average rating of the service is 4 points on a 5-point scale. As for my opinion, I believe that investments in Alpari's PAMM accounts can bring decent returns with active portfolio management.

• PAMM broker FxOpen ()

• PAMM broker Amarkets ()

How to choose the best PAMM accounts in the rating of managers

After we figured out what PAMM accounts are, a reasonable question arises - how to choose PAMM accounts among the great variety in the rating of managers? The matter is further complicated by the difference in the interfaces of PAMM sites, but there are a number of general indicators, filtering and selection by which will help you choose reliable PAMM accounts. I will tell you about where to see these indicators from the main brokers at the end of the article, when we talk about PAMM monitoring. So I'll list them in order of importance:

• Account opening hours

First of all, when choosing PAMM accounts in the broker rating, I filter the list of managers by account lifespan. It is this indicator that I consider the most important when choosing, because. firstly, the possibility of banal luck of the manager is excluded.

Secondly, an account with a long history lends itself to deeper analysis. I recommend paying attention to PAMM accounts with a lifespan of at least 6 months. Exceptions can be considered new PAMM accounts opened by trusted managers, while it is also necessary to analyze the history of old accounts of the manager.

• Maximum drawdown indicator

After filtering by the lifetime of the account, you should filter the rating (if possible) by the maximum drawdown. It is this indicator that gives a clear idea of ​​what risks investors' money is exposed to when investing in a PAMM account. For novice investors, I recommend focusing on accounts with a maximum drawdown level of no more than 40%.

• Profitability of the PAMM account

Only after filtering the rating of PAMM accounts by the time of work and the level of maximum drawdown, you can pay attention to the potential profitability. The choice of accounts in terms of profitability depends on the individual approach of the investor. I can only say that the profitability indicator should be looked at in conjunction with the maximum drawdown indicator, because. in the case of exorbitant returns, the risks rise to an appropriate level.

According to my observations, accounts work best where the ratio of maximum drawdown to profitability does not exceed 1:3, i.e. with a yield of 5% per month, the maximum drawdown does not exceed 15%. A small number of PAMM accounts fit this condition, but those that do definitely deserve the attention of investors.

• Manager's capital

When choosing a PAMM account, you should also pay attention to the amount of the manager's own funds. It is clear that the more KU (manager's capital), the more own funds a trader risks when making deals. This value should be considered in conjunction with the total balance of the PAMM account (Investors' capital + Manager's capital), while it is better if the share of CG is at least 10% of the total account.

• The volume of investors' capital

Here the logic is quite simple, a large amount of funds under the trader's management indicates a high level of investor confidence. I wrote about the attitude, the acceptable attitude of KU to CI in the previous paragraph.

The best and most reliable PAMM accounts

To save time for novice dummies in PAMM accounts, I will list the best accounts that deserve the attention of investors. I will start with the most attractive sites for investing in PAMM accounts.

• Best Alpari PAMM Accounts

PAMM managers on Alpari are characterized by unstable trading results, so the concept of the best PAMM accounts is very conditional, because. you need to look at the current successes of managers. But investing on the PAMM site is available to investors with a small starting capital.

• The best PAMM managers FXOpen

There are 3 accounts among FHopen managers:

Investing in PAMM accounts - monitoring

A little higher, I already wrote what indicators you should pay attention to before choosing a PAMM account in the rating of managers. These indicators, of course, can also be viewed on the official website of the PAMM broker, but sometimes it is more convenient to use PAMM monitoring, where you can see the current indicators of a large number of PAMM accounts.

PAMM monitoring is a service that helps investors to choose, analyze and monitor the situation on PAMM accounts. I have already written about the convenience of using PAMM monitoring in an article about managers, so in this article I will only list the monitoring that I use when investing in PAMM accounts.

The most convenient PAMM account monitoring for me is Alpari, FXOpen, RvdMarkets and other services, charts are more convenient to look at. To monitor PAMM accounts, Alpari recommends using the pammin.ru service, which also provides fairly high-quality analytics.

P.S. About investing in PAMM accounts

Concluding the story about investing in PAMM accounts, I would like to say that although this is a well-thought-out investment system, it is still just an investment tool. The success of using this tool depends entirely on the actions of the investor. If you are just starting to invest in PAMMs, do not chase profitability and quick money.

To begin with, it is better to choose conservative managers with a return not exceeding 100% per annum, as a rule, with such a return, the risks are within reasonable limits. You should also follow the golden rules of the investor

PAMM accounts allow you to combine traders and investors into one account and share profits among themselves.

What are PAMM accounts and how to understand them

Name PAMM comes from the English abbreviation Percent Allocation Management Module, PAMM, which stands for Percent Allocation Management Module.

In simple terms, a PAMM account is a trader's account in which investors can invest, and the broker controls the distribution of profits and losses.

How does a PAMM account work?

• The trader opens a PAMM account and starts trading on Forex, showing a confident and stable profit. The broker provides a rating of managers, which displays data on profitability, losses, capital. The trader sets an offer for investors, which indicates the minimum deposit to his account, the minimum investment period, for example, a week, as well as % of the commission from the profit, for example, the trader will keep 40% of the profit from the investor's money, giving the investor 60% of the profit.
• The investor looks at the broker's rating and finds a profitable PAMM account, which brings 4-6% profit every month. He registers with a broker, replenishes his personal account and transfers money to the selected account of the manager. For example, the investor's contribution amounted to 1000 USD, and the managing trader brought 10% profit in a month.

This is where the work of the PAMM account as a profit distribution begins.

10% of $1000 is $100 of which $40 will go to the trader as a commission (40%), and the investor will have $60 left. In total, the investor received 6% of net profit for the month.

The highlight is that an unlimited number of investors can invest in one manager, and the profit will be divided in proportion to their contribution. A trader with a large number of investors will receive 40% of all profits of all investors, being in a very favorable position, this motivates him to bring more and more stable and better performance. If there are 50 investors and each invests $1,000 and receives $60 each (under the conditions of the example above), then one trader will receive $40 from each investor, which will be $2,000.

• Nevertheless, this is his merit, and in order to collect a large number of investors, a trader must be not just a professional, but consistently make a profit. This is exactly what the investor needs and benefits.

PAMM accounts appeared in 2008 and are patented by a broker.

Later, they began to appear with other brokers, some of which turned out to be scammers and left along with the money of investors and traders.

Alpari remains the leader in terms of quantity and quality of PAMM accounts, where there are accounts with a capitalization of more than $2,000,000.

Pay attention to profitability indicators. The term of operation of many successful accounts exceeds a year, which is already an indicator of stability. Below we show a couple of examples of monitoring individual managers:

Pay attention to the amount in management ( on the screen above it is 4.5 million dollars, on the screen below 421 thousand), as well as profitability indicators for the last year and half a year.

When investing, you must use the rules of diversification, that is, you need to invest in several PAMM accounts at the same time in order to reduce risks.

Video about what PAMM accounts are - expert opinion

Main contributors

The main participants are managing traders and investors. The former trade on the market, while the latter place their funds in order to earn from the trade of the former. The system is very simple and, at the same time, extremely effective.

What is the interest of the managing trader?

Why does he need investors at all, because he can earn on the markets himself? The fact is that not every trader, no matter how good a specialist he is, has a huge capital for trading. That is why many people open PAMM accounts in order to get more funds for trading. In addition, the managing trader usually receives a share of the profits ( percent) from successful transactions and earn even more.

Investor risks

The investor bears 100% of the risk of his investment. In other words, the manager does not limit the risks of investors.

But investors have learned to reduce all risks to zero by creating portfolios - by simultaneously investing in 10-15 or more PAMM accounts. Not a single trader can constantly trade in plus, so if someone brings a loss for the current month, the rest of the PAMM accounts from the portfolio will block it with their plus.

Portfolio investments in PAMM accounts have become the basis for the investor.

If the manager has brought a loss to the investor, say (-7%), then until he brings his capital to a plus, the manager's commission will not be withdrawn. The manager's commission comes only from the investor's profit.

How to invest in PAMM accounts

Since 2009, many brokers have begun to offer the PAMM service, but to date, only the founder of this system has remained successful - a broker that is already working over 17 years. More than 65 thousand investment accounts and by the way, the broker has more than 120 billion of trading turnover per month.

At the moment, the most successful PAMM account has $2.9 million under management.

This speaks not only of the success of the manager, but also of the popularity of such investments among investors.

And the popularity of these investments is easily explained, because the minimum investment starts from 10 dollars which is available to almost everyone.

With only $150 you can already become a portfolio investor and make a profit doing nothing.

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