There are many criteria to select the PAMM trader you can explore as a PAMM investor, like maximum drawdown, return per risk ratio, recovery factor, volatility. Check this is out one by one the indicator.
There are always good times and bad times, nights and days in life. The same things also happen in the PAMM investments or when we’re doing tradings. There are always be profit and loss. We can’t always hoped to win, moreover with a huge volatility in the forex world. There is no analyst in the world who could exactly predict 100% the direction of the market.
What frequently happens is a PAMM trader who has frequently made victories, is a successful trader. The more often he wins, the more successful he is. The more often he makes transactions in a long time period with an enough victories, will be represented by an average daily profit. An average daily profit is commonly represented in percentage, for example 2%. Ìt means the average daily profit is 2% compared to the capital owned by he PAMM trader. It’s also applied to the loss side. We call it average daily loss, for example 1%. It means the average daily loss is 1% compared to the PAMM trader’s capital.
In the forex world, trader is familiar with so called Risk per Reward Ratio which means in every transactions we will make, we must calculate how big the ratio of profit to loss will be. But, in the PAMM investments, Risk per Reward Ratio is replaced because investors do not make their own tradings. So, it is replaced by an indicator named Return per Risk Ratio. The definition of the Return per Risk Ratio is : The ratio of average daily return to average daily loss.
If the Return per Risk Ratio is getting bigger and >1, the profit sharing we expected will also get bigger. With this average statistical data , we are able to make selection toward the performance we expected from the PAMM trader that we will choose.
This indicator does not directly state that the bigger Return per Risk Ratio will automatically has a bigger return. But it will be a filter so that we realize the selected PAMM trader has a good daily victory percentage ratio.
You must learn the indicators owned by the PAMM trader, so that you will be expert not in doing the highly complicated transactions, but in the simple step of selecting PAMM trader. Remember that PAMM is the smart way to invest your money, so what you do is only making selection towards the provided PAMM traders. Read the statistic of the PAMM trader provided by the broker.
Happy investing in the PAMM investments.