The PAMM service is a product that can satisfy the needs of any investor who wants to make money on Forex without independent trading.

All you need is to choose the right conditions, a successful manager and just get your passive income from Forex trading without understanding everything. Therefore, today we will talk about how to use this service correctly and where is the best place to open PAMM accounts, so that the result of such investments coincides with expectations.

Open a PAMM account on Forex?

By its principle of operation, this account is a percentage distribution control module, that is, a kind of mechanism with the help of which a method of private investment in Forex is implemented on the broker's trading platform. In simple words, this is an investment account managed by a successful trader, accepting investments from investors in his own trading and receiving weekly interest on the earned profit.

Thus, traders who already have sufficient experience for profitable activities can attract investors and earn much more than trading solely with their own money. At the same time, investors who absolutely do not know how to trade on their own can invest in one. At the same time, everyone has their own benefit - the manager receives his commission from successful trading operations, and the rest of the income is distributed as a percentage among investors in proportion to their investments.

How to choose a PAMM account

Any Forex broker that provides this investment product on its trading platform has a rating of managers. And here you should be aware that the manager of the invested funds is a trader who earns on Forex by trading on his own. And the more professional his skills, the less risky his activities will be, and your investments will be more profitable.

Thus, when choosing a suitable manager for yourself, you should pay attention not only to the profit that the trader earned while managing the PAMM account, but also to the risks that were present in his trading. That is, first of all, you need to compare the profitability and trade drawdowns of the manager in combination with a number of additional criteria, and only then make a decision whether it is worth investing or not.

Now about everything in order:

Account lifetime

You should pay attention only to those accounts that have been operating for more than a year, that is, you need to invest in a manager who has already proven his own effectiveness. After all, the market is always changing and many strategies stop working, so often those who received more than 15% per month do not withstand the market dynamics over time. An account "experience" of more than 1 year is an indicator that a trader is able to earn income under any market conditions.

Profitability

It should be borne in mind here that it is unrealistic for a manager to earn over 150% of profit just like that. A PAMM account profitability of over 150% is an indicator that a trader uses aggressive trading systems in combination with averaging tactics and without order insurance. Of course, the profitability of such an account can be fantastic, but this increases the risk that tomorrow, if a trader neglects risk management in trading, then such an account will not live long. Therefore, you should choose an option with an annual yield of no more than 100%.

Maximum drawdown

An acceptable drawdown of an investment account is considered to be no more than 20%. A high level of drawdown is an indicator of the manager using more than 2% of the amount of capital per trade, or using "grid" strategies and systems with Martingale. This option is not for us, because if a trader is constantly taking big risks, then his deposit will soon “be covered with a copper basin” or simply pick up losses.

Trade Stability

Does the account exist for a long time without a single unprofitable week? He is also not to be trusted. The bottom line is that traders who trade without stops usually have such indicators, and they average out losing trades, which is fraught with unpleasant surprises in the form of a serious drawdown or a complete “drain”. Therefore, along with high profitability, a trader should also have unsuccessful weeks, which will be an indicator that the manager is not cheating. Therefore, with the overall profitability of a PAMM account, it should also contain rare small weekly drawdowns.

Manager's capital

In the rating, you can often see managers with a large amount of funds - this means that the trader is confident in his abilities. But you can also find a deposit where the manager has thrown the allowable minimum, and quickly withdraws all the profit - that is, the entrepreneur is not confident in his skills and tries to avoid losses. Therefore, you should trust a trader who, along with the money of investors, manages his own large capital.

FOREX brokers with PAMM accounts

Today, the PAMM investment service can be used by more than 10 brokerage companies operating in Runet - In this regard, you should be guided by the classic criteria for choosing an operator:

• the presence of regulation - of course, almost everyone has it offshore, but it is better that it be CySEC
• payment policy of the company - on the forums it is better to ask how the company withdraws funds
• no extra bonuses - if the company offers huge bonuses, then the broker is drowning and trying to attract customers
• reviews about the broker - the general background of reviews should also be positive

Having chosen several reliable dealers, it is worth evaluating their conditions. Since the principle of operation of PAMM accounts for each Forex broker is almost the same, everything will depend on how much money you have. In addition, other investment conditions are specified in the manager's offer, which may be different for each account.

For example, the well-known company Alpari allows you to invest an amount of $ 10, which is available to everyone today.

In addition, the dealer also offers "wholesale" investment in PAMM portfolios, which consist of several accounts (minimum investment 100 USD). The company has already applied for a license from the Central Bank, which increases its reliability rating.

The PrivateFX broker also offers excellent conditions. Here you can become an investor with an amount of $ 20 for a period of 1 week. In addition, the operator offers to invest in indices, on which investors' funds are distributed from 3 to 10 PAMMs - a minimum amount of 100 US dollars, for lines of 2 weeks.

Since investing is the main activity of a broker, you can meet many professional managers on its trading floor.

Another broker with excellent conditions - Instaforex . The minimum investment amount in a PAMM account is from $10, while you can use advanced analysis tools.

This broker will also receive a license from the Central Bank of the Russian Federation in the future, which allows it to be considered as a potential option.

Risks when investing in PAMM accounts

Investing, along with financial trading itself, is a risky activity. To reduce the level of risks, follow a few simple rules:

1. Diversify risks - invest in several accounts at once. So that your profit does not depend on the success of just one person, select 5-7 best managers and distribute your investments between them. In this case, even if 1-2 traders lose your capital, you can easily cover all losses at the expense of the profits of other entrepreneurs.
2. Invest with a strategy that can significantly reduce drawdowns and maximize your income.
3. Choose managers wisely - do not chase mega profitability, but choose the optimal ratio of all parameters.

Thus, this service is one of the most attractive for modern investors. And the main thing is to competently approach this issue and thoroughly analyze the work of the account and the brokerage company itself before investing your funds.

PAMM account is a tool for investors in trust management, which has become especially popular in the last 10 years. What are PAMM accounts and how do they work, how to invest money in them and why they became so famous, all in this post.

What is a PAMM account

A PAMM account is one of the forms of combined currency accounts that allows an investor to allocate his money from the main account to the account of a qualified trader/manager. These traders/managers can accumulate on their account the funds of any number of investors, as well as their own money, using this capital to trade on the currency exchange.

Wikipedia

A PAMM account is a specific mechanism for the functioning of a trading account, which technically simplifies the process of transferring funds on a trading account to a trust management of a chosen trustee for conducting transactions in financial markets.

If you try to explain in simple terms, then a PAMM account is an open account of a trader, which is filled with investors' funds and controlled by a broker.

A PAMM account has a single manager (trader) who trades on the currency exchange with his own money and investors' funds. The main feature of such an account is that the trader manages the total funds, and the account system automatically distributes profit or loss between all participants in proportion to the size of the investment.

• PAMM account in the original: PAMM - Percentage Allocation Management Module, translated from the original is the Percentage Allocation Management Module.

In simple words, a PAMM account is a special trader's account in which investors can invest money. Profit is divided proportionally to deposits, like a mutual fund, but a small percentage is deducted from the profit - the trader's commission.

How a real PAMM account works

To understand what a PAMM account is and how it works, let's look at examples and details.

The PAMM account is managed by one person - the trader.

He trades on the currency exchange and has his own profitability statistics. If you like the rate of return, you can invest. Each trader has his own conditions - according to which there are conditions about, most often managers take 20 - 50% of the profit.

Thus, if in one month the manager brought 20% of the profit, then 10% goes to you, 10% to the manager.

The more money is invested in the manager, the more money he will receive from the profit, therefore, some kind of fraudulent operation by the manager cannot be used in the PAMM account - both parties are equally interested in making a profit and successful work.

Infographics - How a PAMM account works

An unlimited number of people can simultaneously invest in a PAMM account, and the profit will be automatically distributed according to the amount of each investor's deposit. It may be difficult to understand everything the first time, but in fact it is as simple as possible, for clarity, look at the rating of the largest broker at the moment -.

Example 1 :

For the month, a profit of 20% was received. The profit under the offer is divided 60/40 (60% of the profit to the investor, 40% of the profit to the manager). Investor 1 invested 1000 dollars, the total profit on his contribution was 200 dollars (20%), 60% of this profit goes to the investor, 40% to the manager, i.e. The investor's net income was $120.

Example 2 :

Investor 2 invested $7,000 in an aggressive PAMM account N, where a 38% profit was achieved in a month. According to the offer, the profit is divided 50/50. the total profit from the contribution of Investor 2 amounted to $ 2660 (38% of $ 7000), of which 50% is the share of the investor, 50% is the share of the manager. The investor's net income was $1,330.
It is very similar to a mutual fund, there is also a party accepting investments and a large number of investors. The difference from a mutual fund is that if in a classic mutual fund stable average investor returns can be in the region of 8-13% per year, then this figure will be beyond month, 100-140% per annum!

The PAMM service is very different from the classic trust management, as it has a number of distinctive characteristics and features. The main one is that the manager himself trades with his own funds from the very beginning and even after investors join him, he will not be able to withdraw his capital (except for profit). This feature serves as an excellent guarantor of the manager's responsibility to all his investors.

All accounts are controlled by brokers who officially register all managers and do not give the opportunity to deceive investors. Brokers provide statistics, data on all transactions that have received their term -.

Almost anyone can invest in a PAMM account. To do this, he only needs to open an account with the broker he likes, which provides this service. After completing this operation, it will be possible to select an existing manager and add your funds to his PAMM account.

A good brokerage company should not only provide a service, but also maintain it in excellent working condition, one that will be comfortable for both investors and managers.

The actions of a broker in this area can be described by the following steps:

• Creation by managers of good conditions for successful trading;
• Providing an opportunity for everyone to become investors, allowing them to deposit their own funds on PAMM accounts, and directly the investments themselves;
• Keeping a complete record of all the actions of the manager and investors, sending out reports, distributing profits and general control over all processes.

Watch an interesting video about what a PAMM account is:

How to invest in a PAMM account and make a profit

Having figured out what PAMM accounts are and how to work with them, you need to find out exactly how the investment process takes place. It is performed in several steps:

1. Registration and opening.
2. Depositing funds.
3. Search for a manager using rating;
4. Transferring money from a personal account to a trader's PAMM account.

After the money is credited, they immediately begin to work. As you can see, the procedure itself is extremely simple, so anyone who has some free money and knows how to use the Internet can invest in PAMM accounts. The movement of funds can be tracked in the broker's personal account. You can withdraw money from management at any time, requests are executed every hour.

How much can you earn on investments in PAMM accounts

A superficial glance is not enough to determine how much money investing in a PAMM account can bring. There are no clear boundaries. Depending on the style of trading that the trader uses, profits can come in big spurts or barely run. Experienced investors do not recommend chasing huge numbers (200-500% and above) and advise giving preference to accounts with measured and stable growth. The best PAMM accounts are those that give from 4-10% per month.

If we translate all this into money, then at the indicated percentages the following incomes will be brought:

• $100 investment - $4-10 income per month;
• $1000 investment - $40-100 income per month;
• $10,000 investment - $400–800 per month.

With monthly reinvestment, by the end of the year, income can multiply significantly.

How to choose a PAMM account

PAMM accounts appeared in 2008 and the broker became a pioneer in this direction. To simplify the process of choosing PAMM, the broker provides access to a special rating, which contains a variety of information about managers who are currently working. They are arranged in the form of a table that compares the main indicators of each of the participants.

It will not be difficult for an experienced investor to distinguish a promising account from a junk one. For beginners, in order not to make gross mistakes at the very start, it is advisable to pay attention to the following:

1. PAMM account history. The best way to evaluate the profitability and risks of a PAMM account is to analyze the statistics of its trading history. The standard rating of PAMM accounts will provide all the necessary data for analysis. The average profit for a month, a quarter, half a year and a year will tell about the dynamics of profitability. A flat line without sharp peaks may indicate that the trader has a working trading strategy and skillfully uses it.
2. Capitalization. Total capitalization is another important detail that you should pay attention to before investing in a PAMM account. In this case, the sum of the contributions of all investors is implied. The more it is, the better. Bold deposit speaks of confidence of investors and high motivation of the manager.
3. Offer. When choosing an account, it is very important to carefully study the terms of the offer. It contains a list of conditions that govern the relationship between investors and the manager. Its most important points are: 1. Application execution— the period of time after which the investor will be able to withdraw profits or his contribution. 2. Manager's remuneration.

How to open your PAMM and earn the most?

As you can see, PAMM accounts are a benefit not only for the investor, but also for the trader. After all, investors give 20-50% commission. The bottom line is that a trader receives a commission from each investor, and if the total capital is $100,000, which is not so much for a good PAMM account, then with a profit of 50%, the trader will receive 15-25 thousand dollars only in commission, not counting income from own funds.

If you want to start trading on your own, you need to do the following:

• Register an account and open a separate manager account;
• Perform settings (account name, leverage, minimum investment amount, set the commission percentage for investors);
• Top up your account;
• Start trading and make a profit.

Advantages of PAMM accounts

• PAMM accounts are beneficial for everyone. A skilled trader can make much more profit than just managing his own money. The investor gets the opportunity to enter the highly profitable forex market without any experience at all and with minimal investment.
• Working with PAMM accounts is absolutely transparent. Brokers provide accurate trader ratings, acting as an independent monitoring service. Therefore, if desired, the investor can find out all the "inside and out" of each manager.
• Very easy start. Registering with a broker and choosing a PAMM manager takes just a few minutes.
• Flexibility in investment management. Each PAMM account manager can set their own requirements for the movement of resources. For example, there are those who allow their investors to freely withdraw the deposit and interest on it even the next day after the conclusion of the transaction.
• Equal Responsibility. The manager risks not only the money of investors, but also his own capital. Investors can learn the volume of this very capital from the rating provided by the broker.
• Risk diversification. An investor can diversify risks by freely distributing capital among several accounts.

Of course, there are also disadvantages. The most tangible disadvantage is that the investor is 100% responsible for his investments. The manager can either make a profit or completely drain the investors' deposits. Therefore, here it is better to follow the well-known rule and not put all your eggs in one basket. The best option is to distribute the money between 7-15 PAMM accounts.

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.

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

One of the ways to make money in the Forex market is investing in PAMM accounts some part of the capital. Compared to manual trading, PAMM investment is a preferable investment for those who consider the Forex market to be something incomprehensible, but still want to make money on it and decide to use the services of more experienced market participants.

What is PAMM - investment?

PAMM - investment- this is the process of the investor transferring his funds to the trust management of the selected trader. The English abbreviation PAMM itself stands for Percent Allocation Management Module, which means the percentage allocation management module. PAMM - account is a trading account, in which this module is implemented and it is responsible for the equal distribution of profits and losses between the investor and the account manager, who is also its owner. An investor's earnings are a percentage of the profits earned by trading his funds. The manager's earnings also make up a percentage of this profit. Share distribution takes place on the basis of the concluded Agreement. The most popular percentage distribution between the investor and the manager is 50% to 50%, 60% to 40%, 70% to 30%. Losses are distributed in the same way.

The PAMM system scheme can be represented as follows:

1. So, the beginning of the system is given by the dealing center, creating a PAMM service, where all procedures, from depositing funds to distribution and withdrawal of profits, are carried out automatically.

2. Traders who consider themselves successful and experienced, who are ready to take on such responsibility as accepting other people's funds for trust management, can register in the PAMM - dealing center system. So, a successful trader (manager) creates a PAMM account in the system after verifying personal data.

Perhaps, until recently, the only dealing center that provides the full functioning of the PAMM - system, which is 14 years old. Valuing its reputation, this dealing center attracts only experienced and professional Money Managers in order to ensure not only safety, but also a profitable increase in the investments of its client-investors. That is why the company imposes certain requirements on persons wishing to open a PAMM account: the initial deposit when opening a PAMM account must be at least $3,000, which will also participate in trading and assume profits and losses. Consequently, the manager himself is interested in successful trading, otherwise his losses will be equal to the losses of the investor (with a 50% to 50% scheme), or slightly less with a different distribution scheme. This requirement regarding the size of the deposit is a kind of guarantee that the manager will be a person who really understands Forex trading, believes in his strengths and capabilities, and therefore is not afraid to risk his personal money.

For comparison: some other dealing centers that practice PAMM - investing, make ridiculous requirements for creating a PAMM account - an initial deposit of $ 1. Surely there are "wise men" who want to become managers of someone else's capital, having neither experience nor funds previously earned on Forex, as a result - a trusted deposit is doomed to a quick drain.

3. After the creation of a PAMM account, the manager has the right to manage the capital of investors. Both a legal entity and an individual can act as an investor. The deposit can range from a few dollars to an amount limited by the manager or the principles of the PAMM system itself. At the same time, an Agreement is concluded that stipulates all the conditions for cooperation, the main of which is the procedure for the distribution of profits and losses. A little later, we will publish material on how to choose the right manager so that the result of cooperation is as effective as possible. It is important to note that the investor's funds actually remain on his own account, the manager does not have direct access to them, so there is absolutely no point in talking about any theft of funds or fraud!

4. The manager trades on Forex with his own and entrusted funds according to the selected strategies, both manual and automated. The resulting profit and loss is shared with the investor. One manager within one account can cooperate with several investors. In turn, the investor can invest his funds simultaneously in several PAMM accounts.

On average, the annual capital growth of an investor, already taking into account the payment of a commission to a trader, is more than 30-50% (compare with 10-15% for bank deposits!). All operations within the system are also carried out automatically, so there can be no unfair distribution of profits and losses: everything is according to the contract. Acquainted with investment conditions in PAMM - Alpari accounts, find out how to invest in PAMM accounts, you can check the risk-free investment methodology and get answers to frequently asked questions on PAMM - investing by clicking on this link.

Of course, like any other financial activity in the Forex market, PAMM investment is accompanied by risks, namely, incurring losses in case of incorrect actions by the trusted funds by the Manager. However, it is possible to minimize these risks by following the rules and strategies of competent investment. By the way, Alpari recently proposed a scheme for almost break even investment- the so-called structured products, the functioning of which implies a competent distribution of the investment portfolio between bank deposits and PAMM accounts. You can learn more about the features of investing in Alpari's structured products.

Advantages of PAMM - investment.

The advantages of a competent PAMM investment are undeniable:

• - the percentage of possible profits is ten times higher than in any bank;
• - minimum participation of the investor in the functioning of the system - he is only required to deposit funds to the account, from time to time monitor the status of the account, withdraw profits;
• - the possibility of making transactions on the account (deposit/withdrawal) at any time of the day;
• - the possibility of minimizing risks by following special strategies and rules of competent investment.

Investing in PAMM accounts is really a real way to increase your capital, more effective than bank deposits and easier than independent Forex trading. And although the Alpari company is a "trendsetter" in matters of creating a branched structure of PAMM accounts, at present you can also find managers and profitable PAMM accounts with broker Forex4yu, and in InstaForex companies.