PAMM account is a mode of investment, whereby the funds are transferred to a trader in trust, and with a successful trade execution the managing trader gets a certain interest from profit.
PAMM Account Work Principle
Investors put money into managing trader’s account. The managing trader makes trades using his own capital, so all operations are proportionally removed to the investors’ accounts. In case of raising profit, it is divided between investors and a managing trader depending on the size of deposits. In addition, the managing trader earns a profit interest.
PAMM account investment is a high-yield work method in Forex market, especially if a trader has no possibility to devote all his time to trading. Moreover, PAMM accounts can bring a good extra income in case of combining the main job with currency market trading. However, what should be noticed is that investing in PAMM accounts undoubtedly has its risk degree. A trade executed by a managing trader with investor’s funds may bring either profit or loss. That is why it is appropriate to be severe with choosing a managing trader.
As a rule, before investing in PAMM accounts, professional features of candidates are examined first. Primarily, the attention should be focused on the number of completed trades and their results, on the market activity experience and PAMM account management skills. Professional trader is a recipe for deriving profit from investment.
There are certain rules directed to ensure PAMM accounts safety. Firstly, the managing trader may use investors’ capital for conducting trade operations only. Any other actions with investor accounts are not available for the trader.
As a PAMM account also includes the managing trader funds, a successful trade outcome is for his own benefit too. All managing trader actions are transparent and can be monitored at any moment, as well as own funds can be withdrawn from a PAMM account promptly. Furthermore, the investor determines the risk degree by himself, limiting possible losses.
In order not to lose funds and gain a stable high profit - future PAMM account investors should adhere to a basic safety rule: work with managing trader through a brokerage company only. Otherwise, the investor bears risk of losing all his injections.