How does the PAMM Account Investment Work?

businesswoman holding money

Investment with PAMM sytem is a meeting point beetwen trader and investor, in which the y need each other. A trader needs the investment funds, and at the other hand, investor needs someone who are  able to give him a quite good profit from his funds by using the expertise of the forex trader. To commence this mutual needs, surely needed a system provided by a broker that has been equipped  with a PAMM system feature. So the profit sharing will be fairly calculated between them.

The PAMM system begins with the PAMM trader or ussually called as the PAMM Manager. Firstly, he has to make a PAMM account and invest his own money. This is to guarantee that he, as the PAMM Manager, will be carefully taking care of his portfolio. Commonly, a good PAMM Manager listed in the PAMM Account Rating, must have  at least $3.000 as their minimal capital. In order to attract investors, he has  to provide an investment proposal which consists of some rules for  the investors on how to invest their money. There are a minimal amount of investment and a percentage of profit sharing offered,  stated in the proposal. The bigger funds invested, the bigger profit sharing will be offered.

Secondly, the PAMM Manager will make trading using his own capital added by the funds provided by the investor. Since there is no presedence on the trader’s attractive track record yet, it’s a common that in the early steps of the PAMM account, investors will not make any investments. To be listed in the PAMM Account Rating, a PAMM Manager must have been doing his trading for at least 3 months.

A PAMM Investor may conduct a selection process to find  which trader he wants to invest his money to. Investor is free to choose more than one PAMM account. The PAMM investor account remains separated from the PAMM trader account. This is to protect the rights of the investor, whenever he wants to make investment or withdrawal. It is easier for the investor to choose traders who are listed in the PAMM Account Rating, because all traders listed in here have been choosen by the broker based on their ability and goodness according to the standard calculation. The selection process of traders is also depends on the preference of the investors. Investors may choose an aggresive, moderate, or conservative type of traders. The PAMM system has given an indication using the risk level of the PAMM traders. It is wisely recommended for investors to diversify the PAMM Managers. They may arrange a combination consists of an aggresive, moderate and also conservative PAMM Managers. This will help them to stabilize their investor accounts.

In the next step, traders are allowed to make transactions in the forex market with their own money and also the investors’ fund. If they make profit, traders and investors will have their profit sharing as stipulated on the proposed aggrement. But if they lost, the PAMM traders will not get any profit sharing.

Happy Investing !