InstaForex clients have an excellent opportunity to participate in the PAMM account system.

PAMM-system is a service for the collective investment of funds in the Forex currency market.

PAMM-system (Percentage Allocation Management Module) is a set of special trading accounts for working on Forex, with the help of which they manage their capital and the total capital (of other traders). The essence of the PAMM system is the ability of a trader to accept investments from other traders or invest his own funds in someone else's trading account by owning any share in it.

Thus, investors use the capabilities of the PAMM system in order to profit from transactions made by managing traders.

All investments and transfers within the framework of the PAMM system are automatically controlled by InstaForex, which guarantees security, transparency and accounting for all transactions within the system to all its participants.

At its core, a PAMM account is one of the forms of trust management of the collective funds of a number of traders, where the broker performs share accounting, provides the same rights to all traders and allows you to allocate at any time that part of the total funds that belongs to each of them individually. At the end of the trading period, the profit received on the PAMM account is proportionally distributed among the participants (investors) of the PAMM account, and the managing trader receives the remuneration stipulated in the contract for his activity, which can be expressed as a percentage of the total profit for the reporting trading period.

PAMM accounts are divided into 2 types: investor PAMM account and manager trader PAMM account. Investor's PAMM account can only transfer funds to PAMM traders' accounts. The manager trader's PAMM account can only accept investments from the accounts of PAMM investors. Each InstaForex client can have an unlimited number of trading accounts that can participate in the PAMM system as PAMM trader and PAMM investor accounts.

An important feature of the PAMM system is the ability for PAMM investors to diversify risks by investing in PAMM accounts of various managing traders.

For PAMM traders, InstaForex has provided in the system unique innovation: accepting investments from different investors on one PAMM account, which at the moment is not offered by any brokerage company in the world. A unique technology for calculating funds - the development of the company's management and the fruit of the annual work of programmers.

The PAMM-account system from InstaForex is by far the best in its capabilities for managing traders and investors, but work on improving the functionality of the PAMM-account system does not stop even for a second, which allows us to guarantee the highest standards of service and reliability for InstaForex clients.

Forex attracts many with the opportunity to earn big money. But this is an intellectual business, and luck is not waiting for everyone. Today, investment products come to the rescue, which provide an opportunity to trade on the currency exchange without much risk of losing your deposit.

A PAMM account is a financial instrument that has recently been used in the foreign exchange market for investment. Convenience of investing money, good diversification of risks have made this service very popular among traders. Many of the novice traders are not very clear about what a PAMM account is, and how does this investment service work?

“PAMM” is a transliteration of the abbreviated name from Percentage Allocation Management Module (“PAMM”), which means proportional participation, which implies an appropriate distribution in the future of income and losses from the investment amount. In other words, PAMM accounts, in fact, are nothing more than trust management of financial investments.

Let's explain what PAMM accounts are, on the fingers:

People who want to earn money put their money in a common pot and trust a more experienced and knowledgeable participant to manage the total amount. After making transactions, he returns the invested amounts with a profit, leaving himself a commission determined by the agreement.

PAMM is a cumulative trading account, where the following participants are involved:

1. PAMM platform. This is a brokerage company or a dealing center that provides access to trading operations on the Forex market and at the same time guarantees the functionality of a PAMM account, automates settlement transactions between participants;
2. Manager. It can be an individual or a company. He, like the other parties who opened a PAMM account, invests his own funds. This investment is called manager's capital. This is a very important point, because, risking their money no less than other investors, the manager will approach the conclusion of trade transactions more deliberately and more responsibly. Its relationship with investors is regulated by the offer. It specifies the terms of interaction with investors. In particular, the contract must specify the amount of commission as a percentage of profit as a remuneration for account management.
3. Investors. These are individuals who make investments in the manager's PAMM account in order to receive a profit in the part corresponding to his share of investments.

If we summarize all of the above regarding what a PAMM account is, it becomes obvious that in this model each party pursues its own interest:

• DC receives remuneration due to the spread from each transaction.
• The manager has two opportunities to earn: as a result of transactions with his capital and commission from investors for his services, specified in the public offer agreement (commission, as a rule, is about 20-50 percent of all profits received).
• The investor receives his share, in proportion to the amount of investment, minus the manager's remuneration.

It is also worth adding that the creation of a PAMM account for a manager is not only an opportunity to earn on commissions, but also an additional opportunity to reduce trading risks by increasing the trading deposit. And the more it attracts investors, the greater the likelihood of successful trading.

In the event of a drawdown for the reporting period specified in the contract, the receipt of the commission will be suspended until the manager restores the deposit amount to the previous one.

How a PAMM account works

Let's consider the operation of a PAMM account using a specific example.

Let's say the manager's capital is $6,000, and Investors A and B have invested $2,000 and $4,000, respectively. Thus, the total trading deposit that the trader will manage will be $12,000.

In accordance with the offer, the profit should be distributed in the ratio of 30:70, that is, 70% of the income from the investor's investment will be received by him, and 30% as a commission will be received by the manager.

Let's consider two scenarios for the development of events for the reporting period.

Successful

The income for the required period was 10% and the total capital increased to $13,200. How is the profit distributed in this case?

Investor A increased his funds by $200 from $2,000 to $22,000, however, according to the offer, he is entitled to 70% of this amount or $140, and the manager receives 30% ($60) for his services. The amount on the account of Investor A will thus be $2140;

Investor B increased his investment by $400, i.e. from $4000 to $4400. Of these, the system will write off $ 120 as a commission to the manager. Investor B will have $4280 left in his account.

During the same period, the manager increased the amount on his account by $600 and received another $60 and $120 as a reward. As a result, he will have $6,780 in his account.

Unsuccessful

The drawdown was 10%. The deposit decreased by $120 and became equal to $10,800.

Losses, like income, are distributed proportionally, that is:

Investor A has lost $200 and will have $1800 in his account;

Investor B, respectively, $400 and the balance of the invested amount on the account will be $3600;

The manager is at a loss of $600 and has $5400 in his account. And until he restores the balances of investors at the beginning of the last reporting period, the manager will not receive commissions.

This example clearly confirms the manager's interest in profitable trading.

How to choose a PAMM account

In order to correctly evaluate the manager's strategy, it is necessary to analyze his Forex trading for at least six months;

• The optimal level of monthly profitability fluctuates between 10-20%.
• There should be one and a half times more profitable trades than unprofitable ones.
• The average acceptable drawdown rate is at most 5% of the amount on the PAMM account.
• If a trader has more than one open lot per order for $10,000, then this indicates his risky behavior.
• As a manager, it is better to choose those who have been working on a real account for at least one year.
• The optimal investment period is at least six months. This is the period of time for which you can have a good result.
• When choosing a PAMM platform, you need to pay attention to how reliable, responsible and authoritative they are.

PAMM accounts are equally useful for an experienced trader, which reduces the risks of trading operations, and for a novice player in the Forex market, who does not yet have enough experience to develop an independent strategy.

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 into 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.

If you find an error, please highlight a piece of text and click Ctrl+Enter.

Is it possible to open a PAMM account on my own and how to do it? How to choose the best PAMM accounts for investment? What are the features of investments in Alpari PAMM accounts?

Hello dear friends! With you Denis Kuderin.

We continue the topic of private financial investments in profitable investment areas. The subject of the new article is PAMM accounts. Here I will share with you my personal experience on how to use this investment tool.

The publication will be of interest to novice investors and all those who wish to improve their financial literacy.

So let's get started!

1. What are PAMM accounts?

Do you want to know how to earn a regular income and still not go to work? I'm sure most readers will answer in the affirmative. Every reasonable person seeks to find such a source of financial income, which would be minimally dependent on labor costs.

PAMM accounts are among the reliable and highly profitable investment instruments. Having several such accounts, you can get a regular profit without spending much time.

But first you need to thoroughly understand what this financial instrument is and how to use it.

Let's start with a scientific definition.

PAMM account– there is a mechanism for the operation of a trading account, which allows you to transfer monetary assets to a trust management of a professional manager for conducting financial transactions on the exchange markets.

The term "PAMM account" itself comes from the English abbreviation Percent Allocation Management Module, which means Percent Allocation Management Module. Don't let such tricky words scare you - soon everything will become very clear.

Example

You have $1000 but no time or knowledge to multiply your capital. But you know that your friend Petya is engaged in profitable foreign exchange transactions, including those involving other people's investments.

You give Petya the money on the condition that every week he will give you interest on the profits. For a month of financial transactions, Peter not only returns you the amount invested, but also dividends in a predetermined amount (say, 25%). For the labors of a successful currency speculator, he receives a commission. The participants in the deal are happy to go home.

This is how PAMM systems work. Your assets are transferred to the account of the manager who conducts trading (trader) operations on the Forex market. The number of investors managed by one trader is not limited.

The main advantage of this way of earning is the complete transparency of the actions of the manager. PAMM accounts involve automatic monitoring of all financial transactions. The purity of transactions and the observance of the rights of the principal (investor) are monitored by a broker providing a trading platform for traders.

By choosing deposits to PAMM accounts, you stop "working for your uncle" - now "uncle" starts working for you!

Advantages of PAMM accounts:

• even a person with zero experience in Forex can start working with accounts;
• the minimum deposit amount is from $10;
• the principle of operation of the system excludes the withdrawal of money from the account by someone other than the investor himself;
• the depositor has the right to withdraw funds from the account at any time if he is not satisfied with the level of profit;
• each investor has a personal account from which he can monitor the status of his account;
• money is managed by professional traders.

Like other investment instruments, PAMM accounts are characterized by certain risks. Experts call the main disadvantage of such accounts the difficulty of choosing a reliable broker. The first rule of successful investment is a rational and sober approach to choosing a trading platform.

Read a separate article about what it is.

2. The principle of operation of a PAMM account - 5 main stages

Investing in PAMM accounts is the most affordable way for beginners to participate in currency speculation on the Forex market. However, this investment option cannot be called completely safe for capital, since the financial transactions of traders do not always bring profit.

To reduce risks, you need to act according to a pre-designed scheme. And most importantly: you can’t choose the first account that comes across for trust management - you need to look for a partner as carefully as possible.

Now about how PAMM accounts work.

Stage 1. The manager opens a PAMM account

A PAMM account operates on the basis of an electronic platform - a broker's website, which is also called a PAMM service. There are quite a lot of such services on the Internet - Alpari, InstaForex, AlfaForex, etc. Later we will consider the features of the most reliable and popular sites.

Successful traders with relevant statistics of exchange transactions become managers. It is clear that a speculator with a negative balance cannot claim the role of a trustee: the people simply will not follow him.

Stage 2. The investor finds a manager's PAMM account

Not all investors who decide to invest in Forex have the knowledge and experience necessary for successful trading. Moreover, 90% of beginners who decide to become independent traders suffer losses.

Transferring assets to trust management is a real way to avoid losses. At the same time, you do not need to understand all the intricacies and nuances of the foreign exchange market - the manager receives his commission for this.

The task of the depositor is to choose a reliable partner, focusing on ratings, reviews, experience and other objective factors that make it possible to judge the level of the trader.

Stage 3. The investor invests money in a PAMM account

Next, a successful trader encourages investors to invest in his account on the condition that he takes part of the future profit (for example, 20%) for himself. At the same time, the conditions for withdrawing money from the account by depositors are stipulated in advance.

Ideally, the investor has the right to withdraw his assets at any time, but sometimes there is simply nothing to withdraw, because at this moment the trader's account is in the status drawdowns.

Drawdown- loss on the trading account, expressed in numbers or percentages. Any strategy has a certain amount of drawdown, which also determines the degree of risk of the deposit.

The principals do not have the right to interfere in financial speculation, so all transactions are “on the conscience” of the manager. Investors can only track the statistics: it is provided by the platform on which trading is carried out.

Stage 4. The manager trades on the market

The manager trades on the currency exchange, using both his own savings and the money of investors.

Each trader has his own strategy - it can be aggressive, cautious, moderate or any other, depending on the temperament, experience and financial capabilities of the manager.

Dividends and losses received as a result of exchange transactions are distributed automatically between the manager and investors in proportion to the amounts deposited.

Stage 5. Withdrawal of earned money

The investor has the right to deposit and withdraw money from the account on any day when the stock exchange is open. There is no need to wait for the end of the month or other deadlines.

The mechanism for withdrawing money is simple: the principal fills out an appropriate application in his account, enters the desired value in the "withdrawal amount" field and confirms the order. Within 24 hours, the funds should go to your electronic or bank account.

3. How to open a PAMM account - step by step instructions for beginners

Now about how to open a PAMM account for beginner Forex investors.

There are 3 parties involved in the process:

1. Investor.
2. Manager (trader).
3. Dealing center (aka broker).

The success of an enterprise depends both on the right choice of a broker and on a competent search for a manager. A reliable dealing center ensures that the manager does not run away with your money, and monitors the correct distribution of losses and profits. And an experienced trader is directly involved in multiplying the invested funds.

Step 1. Compiling an investment PAMM portfolio

Before you start working with the PAMM system, decide on the structure and size of your investments. In professional language, this is called "compiling an investment portfolio."

The first rule of safe investment is the diversification of deposits (separation of investments into several streams). Such manipulation will protect your assets from losses and reduce risks.

An investment portfolio is a set of your investments, a tool that allows you to get maximum profits. If you put all your money on one PAMM account, the risk of losing your savings increases many times over.

Step 2. Choose a company

When choosing a company that provides a platform for trading, be guided by its experience, reliability and popularity among other investors. All brokers are included in the rating of companies and must meet certain requirements.

The criteria for choosing a partner are as follows:

• the age of the company itself;
• broker's profitability for the entire period of work and for the last months;
• the number of broker clients;
• conditions for opening an account;
• convenience of the interface;
• awards and achievements.

You should not attach great importance to customer reviews on thematic forums - these may be the machinations of competing organizations.

In addition, reviews are usually written by those who lose money as a result of self-trading or incorrect financial policies. Brokers are not responsible for the mistakes of beginners.

Step 3. Register on the company's website

The trading platform has been chosen - the time has come for real action. To start investing, you need to register in your personal account on the broker's website.

You will need to enter personal data - name, address, mail, etc. I warn you that you should not use fictitious names and surnames: the company has the right to require confirmation of your identity at any time.

Step 4. Choose a Manager

We proceed to the most crucial moment - the choice of the manager. Each brokerage site has a rating of traders.

Choose those traders who have shown the highest profitability over the previous 3-6 months. Compare charts, strategies, number of investors and total investment.

Step 5. Open a PAMM account

The point is small - it remains to open a PAMM account and transfer your money to it. Managed accounts are a long-term investment vehicle, so don't expect immediate profits. And do not be afraid of drawdowns - this is an inevitable phenomenon in currency trading.

More about it in a separate post.

Before investing in certain traders, it is worth subjecting them to a comprehensive analysis. Check a number of indicators to find out if the selected player is worth trusting.

Each trader has a certain experience in the market. The larger it is, the higher the probability of stable profits. And vice versa: too “young” PAMM accounts are a very unreliable investment tool.

For example, if the account is not yet a month old, it is too early to judge its profitability. Each strategy has its own payback period: it will take time to evaluate the profitability of a particular trading method. The optimal period is at least 12 months.

Tip 2. Pay attention to the maximum drawdown indicator

Another indicator that requires mandatory attention is the drawdown. It shows what risks to expect. Beginners should choose traders whose losses over the past six months amount to no more than 40% of the amount of capital.

Indicators above this value are not yet a sign of disaster. Rather, it is evidence of the trader's aggressive strategy. But beginners should not risk capital by choosing such unpredictable partners.

Profitability is an indicator that should be monitored in parallel with the drawdown level. It means how much profit the manager receives for a long period of trading.

The yield of successful PAMM accounts should initially be higher than that of less aggressive financial instruments (bank deposits, mutual funds, gold deposits).

Example

Let's say a figure of 10% is too low for experienced traders and at the same time too unreliable for investors. But 50% or 100% return on investment is quite an acceptable result.

Tip 4. We analyze the amount of capital of the manager

The amount of the manager's own capital is another important indicator of reliability. The more money a trader has, the higher his interest in making a profit for himself and his investors.

Losses affect all account participants (including managers) in equal proportions. The solid capital of the "helmsman" is a kind of guarantee of his responsibility.

The more investors have invested in the account, the higher the manager's credit of trust. This means that investors are confident in the profitability of the PAMM account and trust it with their capital without fear.

Top managers "turn over" millions of dollars. Beginners without investment experience and zero knowledge in the field of currency trading should look at such accounts.

5. Where is the best place to open a PAMM account - an overview of the TOP-5 companies

So, a PAMM account is a form of cooperation between several investors and a manager in order to increase capital. Trading operations are carried out online: investors can visually observe what is happening with their capital.

And although PAMM systems are a relatively new service on the investment market, competition among platforms that provide accounts for trust management is very high.

I offer an overview of the 5 most popular Forex brokers.

is the largest PAMM platform in Russia and the CIS. The company has been operating in the currency trading market since 1998. Today, the total amount of investments invested in trust management is approaching $15 million.

The total profit of investors is more than $3 million. The number of depositors in PAMM accounts is more than 50,000 people. The company publishes a constantly updated rating of managers and provides investors with information support.

ForexTrend– the company considers its mission to be the introduction of the most modern and civilized trading methods to the Forex market. The platform is committed to constantly improving customer service and popularizing new tools.

InstaForex- Another broker with a high reliability indicator. The company was founded in 2007 and constantly occupies the top lines in the ratings of online Forex trading platforms.

For several years in a row, the firm has been awarded the title of "Best Asian Forex Broker". Traders and investors have access to analytical tools, statistics, video tutorials and free consultations.

Alpha Forex– the company initially set itself a long-term goal: to become the best Forex broker in the Eurasian market. The site was the first to work through the professional trading terminal MetaTrader 5.

The company is heading for stability and transparency of work with PAMM accounts. Managers receive remuneration only with a positive financial result.

Forex4 you is an international company with long-term plans. A course on honesty to customers and the competence of employees. The broker is engaged in its own development of trading tools and constantly introduces new technologies into its work. Automatic withdrawal of profits is available for investors.

For clarity, let's combine the companies and their performance indicators in the table:

№	Marketplace	Expected rate of return	Peculiarities
1		50%	The oldest brokerage site in the Russian Federation
2	ForexTrend	45-60%	Large selection of aggressive and conservative strategies
3	InstaForex	From 30%	Minimum deposit - from 1 dollar
4	Alpha Forex	20-80%	Investment is available 24/7
5		From 25%	Additional responsibility of the manager

Additional information about - in a separate publication.

6. How NOT to invest in PAMM accounts - TOP 7 mistakes of a novice investor

Now about how NOT to invest in PAMM accounts. By knowing what mistakes inexperienced investors make, you will reduce risks and increase profits.

Mistake 1. Inability and misunderstanding of working with risks

Forex trading is a risky activity for capital. Like other financial transactions, speculation in the foreign exchange market involves a certain risk, which cannot be avoided.

Be prepared for the fact that you will have to work in constant tension. Some beginners panic at the first drawdown. To become an investor, you need to have strong nerves and a cool head. If you want peace of mind, put your money in the bank.

Mistake 2. Blindly investing in PAMM accounts of the leaders of the rating

The market situation is characterized by constant changes. The current leaders can fall to the bottom of the rating list at any moment.

Blindly investing in hyped traders is not a guarantee of high profits. Conduct your own analysis and pay attention to the experience of exchange players.

Mistake 3. Entering during a big rise

Currency trading is characterized by cyclicality. A big boom is followed by a recession - these are the laws of the market.

Beginners often invest in a PAMM account when it is at its peak. It is better to “enter” when the account is in a state of drawdown, but an early rise is expected.

Mistake 4. Exit during a recession

The other extreme is exiting during a recession. Such a decision is often made on emotions - the investor experiences panic, fear for the loss of funds and forgets about the original strategy.

Experts advise to remember a simple truth: the Forex market is always alive, not static. Recession precedes rise and vice versa. Wait until returns stabilize before exiting. Don't let emotions get in the way of financial affairs.

Mistake 5. Checking statistics too often

The information universe is infinite. If you check the status of your account too often, you can become dependent on statistics and earn neurosis or depression.

Traders and trading systems are just tools that will work regardless of your participation. Do not spoil your nerves by trying to change what you cannot influence.

Mistake 6. Expecting a quick return on investment

Investments in PAMM accounts are long-term investments. Do not think that the first deposit will bring you profit the very next day.

Even experienced traders with their strategies take time to realize their potential. We can talk about the first objective results only 3-6 months after opening a personal account.

Mistake 7. Going to extremes

Beginners who have invested in an aggressive PAMM account see a drawdown, panic and transfer the money to another trader with a small but stable income. After a couple of months, it seems to them that the profit is negligible, and they again transfer capital to the speculator with a risky strategy.

Such jumps can go on indefinitely without giving tangible results. Conclusion - stick to the middle.

7. Conclusion

Let's sum it up, friends. PAMM accounts are a promising and noteworthy investment tool that can be used by novice investors who do not have any experience in the foreign exchange market.

Modern trading platforms provide a quite acceptable level of safety for investors, but the profitability and degree of risk largely depend on the actions of the investor himself.

The HeatherBober project team wishes readers success in mastering new financial opportunities! We are waiting for the evaluation of the article, comments and thoughts on the topic of publication. See you soon!

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.

IN 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 graph 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
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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!

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