How to properly manage your PAMM account. Step-by-step instructions on how to choose a PAMM account. Maximum drawdown amount

HOW TO CHOOSE A PROFITABLE PAMM ACCOUNT

Free money requires mandatory investments. Since investing in bank deposits obviously depreciates the value of deposits, more advanced tools are needed that can not only protect against inflation, but also increase the funds earned. PAMM accounts appeared relatively recently as a financial instrument for investing in Forex, but after a few years the situation changed dramatically...

PAMM accounts (see " What is a PAMM account") appeared relatively recently as a financial instrument for investing in Forex, but after a few years the situation changed dramatically. A convenient and uncomplicated investment system with the possibility of diversification appealed to many beginners and quite experienced investors.

Every year the number of PAMM accounts in our country increases tenfold. In 2010 there were only 100, in 2011 – 1000, and in 2012 – 10,000, which clearly demonstrates the growing popularity of this type of investment. “PAMM” is a Russian transliteration of the English abbreviation “PAMM” (Percentage Allocation Management Module), a percentage distribution management module. At its core, PAMM is fiduciary money management.

Selecting a PAMM account

With the right choice, PAMM can be the most profitable way of investment. When we talk about the right choice, we mean PAMM accounts that bring stable profits without significant risks. Your earnings will depend on which PAMM account you choose, so you shouldn’t make rash decisions and hope for luck. Although it must be recognized that investors may have different investment goals and attitudes towards risks.

Accordingly, the choice of PAMM accounts will be different. In addition, investing all your funds in one account, even the most reliable one, is risky, so we recommend you portfolio investing (investing in several PAMM accounts). This way you can protect your investments - even if one of your accounts goes bankrupt, you will make a profit on the rest and be able to compensate for losses.

We invite you to consider the sequence of actions when choosing a PAMM account, which seems optimal to us.

Step 1. Selecting the best brokerage company providing PAMM investment services

How your work will turn out in the future depends on this choice. A successful PAMM broker is always reliable and has a developed PAMM service. If you have chosen a broker who is ready to go bankrupt, then even the most successful PAMM account will not be able to save your money. The PAMM service creates convenience and allows you to work comfortably.

Step 2. Meet the leaders in the PAMM account ratings

First, just look at the top rankings. In order not to make a mistake in choosing a PAMM account, you need a complete and detailed rating of PAMM accounts. Top rating of PAMM accounts is a list of the best accounts of an individual broker, compiled by him, at his own discretion or taking into account the opinions of investors.

The top rating will be useful for novice investors, since it is compiled based on established parameters. The profitability of a PAMM account for a short period of time or for the entire period of the account’s existence can be used as the main factor. These indicators do not represent a complete picture of trading on the account. It must be admitted that it is impossible to determine the best PAMM accounts based on the Top rating.

Step 3. Selecting a PAMM account based on full rating

A successful PAMM account allows you to select a full rating of PAMM accounts, with a list of absolutely all manager accounts. There are more parameters in this rating than in the Top rating, but some can be neglected since they are of a general nature. Important rating parameters include:

profitability;
the duration of the account;
amount under management;
maximum drawdown size;
account manager's capital.

Profitability is the indicator from which investors begin to choose investment objects. If accounts with low returns are not taken into account, only the best PAMM accounts will remain. In the full rating, the return shows how much an investor could gain or lose if he invested money in this PAMM account. The manager's profitability can be analyzed by selecting any period - day, 3 months, six months, year.

In the ratings, the profitability of the account is indicated without payment for the services of the manager. Duration of existence. Past profitability of an account does not guarantee stable income in the future. But the best PAMM accounts usually exist for a long time. Experts advise beginners to avoid accounts “younger” than 6 months.

Amount under management. Conservative investors prefer traders who have large sums under management, rightly reasoning that this is evidence of investor confidence. Sometimes successful traders with large sums under management raise their own fees or stop accepting money from new investors.

Maximum drawdown. An extremely important parameter showing the maximum loss that an investor would incur when working with a certain manager. There are ratings in which the maximum drawdowns can be seen on the chart.

On the best PAMM accounts, the maximum drawdown, as a rule, does not exceed 20%. Manager's capital is the manager's personal funds on the PAMM account. Investors view this indicator differently. Beginners often believe that with large investments of their own, the trader will be more responsible when it comes to trading.

But professional investors who understand the intricacies of the market are not so optimistic, primarily because it is unknown how much money the manager invests on PAMM, distributing it into different accounts. The manager's total indicator can be quite significant, which is not possible to judge by each individual account.

Don't forget about risk diversification. Remember the folk wisdom - don’t put all your eggs in one basket. Do not put all your money on one PAMM account. Select several suitable accounts. Invest up to 10% of your funds in aggressive accounts, the rest in conservative and moderate ones. This technique can significantly reduce risks and increase the profitability of investments. If one account loses money, other accounts will make a profit and you will not be at a loss.

Greetings to everyone who is still looking for additional sources of passive income! Dear friends, I’m just sure that many of you have already thought more than once about making money on Forex, but are afraid that due to the lack of sufficient experience they simply won’t be able to do it successful trading career. Tell me, how many of you have already thought about trust management of the account? If there are any among you, it means that the problem of how to choose a PAMM account for investment has either already arisen more than once or will only arise. Considering relevance This question, I think, no one will doubt that it is to him that I have dedicated today’s review.

Requirements for PAMM accounts

To select only the most reliable PAMM accounts for your investment portfolio, I have compiled a number of key characteristics which they must comply with. I cannot guarantee that these requirements are ideal and will allow you to squeeze out all possible profitability from a PAMM account, but they will definitely ensure moderate profits and protect against loss of funds.

As an example, I suggest using PAMM account Elektronik opened with the Alpari broker. For anyone who is interested in how to choose the right PAMM account, I highly recommend paying attention to such points.

The trading history of this account manager lasts more than 1 year

As you know, you can invest in accounts that are less than 1 year old only if the manager can confirm trading statistics. I am sure that many newcomers now have a completely logical question: “Why are we focusing specifically on a period of 1 year?” The thing is that, as a rule, it is the first half of the year that becomes a kind of “acceleration” for all accounts. That is, at this time the manager has very little capital and practically no investors - he is trying in every possible way to show potential investors the maximum possible return on the account. If trading goes well during this half-year, then investor funds slowly but surely begin to flow into the account. Increasing the amount of working capital allows the manager to reduce the risks and profitability of the account.

However, now the manager has a new problem - caused by responsibility for the huge amount of funds at his disposal. It will take us another six months to weed out all the faint-hearted traders who do not know how to work with large accounts. During this time, “surviving” traders manage to gain experience in managing large-volume accounts and adapt a working strategy to them. And only after a year has passed from the moment the account was created, you can invest money in it with a clear conscience and peace of mind. However, here I advise you to be guided by a small limitation - do not invest in a “young” account an amount that is more than 5% from the total volume of your investment portfolio.

The profitability of PAMM accounts should be as stable as possible

That is, if in the first year the account earned 500% per annum, and 450% of it was earned in 1 day, then it is better to refuse cooperation with it completely. Remember, the more stable the account’s profitability, the smoother the growth of its graph will be and the more space in the PAMM portfolio can be allocated to this investment option. Moderation and smoothness of growth at the initial stages– this is a certain guarantee that the profitability of the account will be maintained and repeated in the future.

Drawdown size

Pay attention to the size of the maximum drawdown - how much of the deposit can be lost by a trader during one transaction. It is very important that this indicator did not exceed 40%, otherwise it is better to refuse to work with such an aggressive PAMM account.

Deposit load

Most brokers with PAMM accounts publish information on the level of deposit utilization on their websites. Keep in mind that the higher this indicator is, the greater the chance of losing your deposit. Workload is nothing more than the amount of money simultaneously involved in trading. An acceptable level of workload is considered to be 10-35% .

Manager's capital

View the manager's capital (amount of own funds). The optimal amount for the manager, as for me, is from 1000 to 5000 dollars. If the amount is $200-500, it's not serious. A person is not ready to risk his money, and by and large no one cares about investors’ money.
Perhaps the main difference between PAMM accounts and traditional trust management is that the trader has to risk his money along with all other investors. That is why, when studying, pay attention to how much of the manager’s own funds is involved in the account. If you have little money, then this should alert you. After all, it is not clear why the trader does not work with his own funds.

Profitability of investment

Another parameter that requires our attention. To make it easier for you to navigate the numbers, let us denote that an acceptable return is considered to be one that is 80% per annum. In principle, the figure is quite adequate for stable traders who calculate all possible risks. If the broker offers you an income of 30%, refuse the deal, since you can get such a profit through less risky investments.

Reputation

Study reviews of investing in certain PAMM accounts from experienced investors. You can find them on thematic websites, forums and blogs. In addition, most managers have their own topics on forums, where each investor can ask him all the questions that interest him.

Choosing a brokerage company

A crucial moment on which your future depends. If you remember that There are almost no regulators on Forex, then most likely you will be interested in large brokerage companies that work with several accounts at once, maintain contact with clients using user-friendly interfaces and are famous for their excellent reputation in the market.

PAMM account investment scheme

For those who have just found themselves on the threshold of trust management and do not know how to make money on PAMM accounts, where to go and where to start, I suggest easy-to-follow algorithm. This instruction is quite concise, but succinct. Its strict implementation will allow you to significantly succeed in investing through Forex PAMM accounts.

Decide which broker you want to work with. Register your personal account on its website and open an account.
Please note that each broker has its own manager rating PAMM accounts, and therefore this also needs to be taken into account.
Having chosen the most suitable PAMM account for you, deposit money into your personal account and accept the terms of the manager’s offer.
When the first account is created, proceed to creating the next one. Can be considered ideal diversification from 3-6 accounts, additionally owned by different brokers.
Make it a rule regularly withdraw profits from accounts.
Don’t forget to monitor the reporting of your PAMM portfolio. Analyze data and move money out of unprofitable or under-performing accounts into more profitable businesses.

Open abrokerage account amarkets

Mistakes of a beginning PAMM investor

Well, now let's talk about how not to invest in PAMM accounts. Knowing about the most common mistakes of inexperienced investors, you can avoid them yourself, thereby reducing your risks and increasing profits:

Lack of understanding of risk management principles. Since Forex trading poses a risk to your capital in the same way as all other financial transactions, you must be prepared for stress and work under constant pressure. Literally the very first account drawdown becomes fatal for most beginners. Inexperienced investors panic and, under the influence of emotions, withdraw money from the investment account. To have a successful investing career, you need to have steely self-control and a strong nervous system. If you are not ready to take risks and say goodbye to peace of mind, take the money to the bank and put it on deposit.
By blindly choosing PAMM accounts that occupy the top places in the rating, you expose your capital to enormous risk. The fact is that the market is so changeable and unstable that today's favorites may end up at the bottom of the rankings literally the very next day. If you are interested in the truly best PAMM accounts, conduct your own analysis and listen to the advice of experienced players.
Don't expect quick returns from investments. You must understand that investing in PAMM accounts is an investment for the future. It is naive to believe that your first deposit will make you rich within a week. Objective results can only be expected a few months after you open an account.
Don't go to extremes! When you see the first drawdown in your account, do not panic and do not rush hysterically to transfer money into the hands of another trader. In just a couple of months, it will seem to you that a small but stable income does not give you the expected results, and you will take your deposit to speculators with risky strategies. Ultimately, such leaps will not give you any results. If you want to earn money, stick to the “golden mean”.
Another extreme can be considered leaving the project during its decline. Most often, such decisions are made by emotional investors who fall under the influence of panic and fear of losing what they have earned. Remember: after a recession there is always a rise. The Forex market is cyclical, and you need to get used to it. Don't let your feelings decide your financial affairs.
Don’t try to “hit the jackpot” by entering the account at the moment of its greatest growth. You already know about cyclicality and what will follow the rise, right? I advise you to enter accounts that are in a state of decline, but are preparing for an imminent recovery.
Leave the statistics alone and stop monitoring PAMM accounts every second hoping to catch the slightest vibration.
If you check your account status too often, you will very soon develop neurosis or become depressed. Do not spoil your nerves and do not try to change the inevitable and beyond your control. Trust your trader and stay healthy.

Which PAMM accounts can I invest money in?

Example of profitability with PAMM investing for 6 months

For greater clarity, I decided to show you how much you can earn in six months of participation in trust management if you deposit it into a PAMM account 1000 dollars.
So, imagine that we divided our capital into 4 equal parts of 250 dollars and put them in accounts in different companies. Let us determine that the average profitability will be from 7% to 10% monthly. From here we have:

in January the profitability was 10%, since this month is considered the most profitable of the year, and therefore we earned $100;
in February, profitability dropped to 5%, and we earned $50;
in March we were able to get only 20 dollars, with a profitability of 2%;
in April there was a drawdown and amounted to -8%, and we lost -$80;
in May, participation in trust management brought a profit of 6% and amounted to $60;
in June, profitability dropped to 4%, and we earned $40.

Thus, our profit was $190 in 6 months or 19%. Agree, pretty good this example is closer to real numbers.

Summary

To summarize all of the above, I just want to note that it is possible to make money on PAMM accounts; you should not consider them as just another scam. If you know where to invest, the profits will not be long in coming. Take risks, try and get rich. See you soon!

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For investors in trust money management, the most important thing is choose the right PAMM account for investment. Everyone always says that you need to invest your money wisely, but what does that mean? The only thing an investor can and should do is choose a manager, and choose well, because your income will depend on him.

Personally, I chose my managers based on certain principles. So, the highest percentage of successful operations and some stability of indicators were the main things I paid attention to. Let's go in order.

How to choose the right PAMM account?

The first thing I will say is where you can invest your money. The first thing everyone sees is the column with profitability, and of course there are huge percentages there: 500-1000%. The fact is that some managers actually achieve this, with a small initial capital, but just as quickly they lose it, some achieved this in a couple of days or a week, then they lose half and some stop trading, some then trade very slowly... as a result, they can remain in the first places of the ranking for a long time, because in the profitability column they will have 500%, for example. Let's get to the core of being an investor. What is most important to us? This is the safety of our money + stable income. So we look at the profitability graph, but we are looking for average figures of 200% per annum with a 50/50 offer - for the investor it will be 100% per annum.

Safety of money

There are several parameters that will guarantee the safety of our money. Among them are more or less important, they simply together give us confidence in this.

— PAMM account age . If it exists successfully for a year, then this is a good indicator for us. The manager has been working with a profit for a whole year already; during the year he had many difficulties, but he always managed to cope, which means that if they appear again, then we can reasonably assume that he will cope with them again.

— MC (manager’s capital) . If it is very small, then this encourages investors to doubt the manager. Why did a successful trader save so little? Why doesn’t a successful trader show that he trusts and risks not only the investor’s money, without losing anything? A large CG shows that the manager has both personal interest and responsibility. But sometimes, in rare cases, the manager has his own reasons for this; he can justify the small capital with some of his own arguments.

— Amount under management . There may be both CG and investor money. If this amount is more than $50,000, and I look even at larger ones, from 100,000, then it means that as a rule, many investors invested in this PAMM, and many trusted it for various reasons. In this case, these reasons can be looked for and in most cases they will be obvious, because no one invests money just like that.

-Relative drawdown . This is a relative loss, the maximum amount that the manager could lose at some point, this loss is calculated as a % of the amount. For example, it is 35%, which means that the manager at some point lost 35%. But this could also be a potential % since this loss might not have been recorded, i.e. maximum loss during an open trade. Those. the manager did not receive a 35% loss, but only could, since in the open transaction he had -35%, but the market changed and went to +10% and then the manager fixed the transaction, closing it with +10%. Each PAMM account has one, since it is not possible to trade all transactions only in +. Perhaps one was at – 35%, and the other 10 were at + 35%. This % only shows how much the manager could have made a mistake at some point. If this number is close to 90%, then it’s worth thinking about it and taking a closer look at the income statistics. But in general, up to 40-50% is the norm or acceptable value.

You can watch and study this or that manager.

Offer details

In essence, an offer is the manager’s conditions for accepting investments.

There are explanations in the offer, but I will make a few comments:

Trading period 4 weeks– This means that you will be able to withdraw money once every 4 weeks. In order to do so, you need to make a withdrawal request, in which you indicate a certain withdrawal amount, or withdrawal of only profit or the entire deposit and profit. Most PAMM accounts have a trading period of 1-2 weeks.

Reward 50%- this means that the manager will receive half of the profit earned as payment for the capital management service provided to him. For example, in January he earned 31.72% - therefore, you get 15.86% (exactly half) of the amount of your investment.

Liability: 0%— this line means that you share losses equally with the trader if he goes into the red.

Min. amount and balance: 500.00 USD– the minimum amount for investment is indicated here.

Very clearly, without graphs, the column shows the % of profitability by month. For example, a PAMM account has been in existence for 7 months, and the following data is in the column:

PAMM 1 brings very good income in some months, but there are also losses. In PAMM 2 the income is approximately the same every month. Who is more likely to make a loss? The answer is obvious. Since we are looking for stable income and reliability, we will choose PAMM 2. In investing, the main thing is not the lottery and thoughts of “what if you get lucky,” but a planned and reasonable investment of money in order to make a profit.

You can also monitor this indicator on Alpari PAMM accounts where you can invest money. There you can see this clearly in the profitability graphs. For example, here are the following graphs:

In general, there is growth, but there are also declines that can once exceed growth, since declines are as stable as growth, although to a slightly lesser extent.

Ups and downs as well. Risk, not reliability, not stability.

Ideal profitability chart

These are all the main points you should pay attention to when investing. Everything is quite simple and does not require much time, since brokers provide all these data in the most convenient way for us. Now a question for you how to choose a PAMM account Almost solved, all that remains is to move on to practice.

Investing money in Forex accounts in order to generate income attracts many of our citizens because they themselves do not need to participate in the complex process of trading on the exchange. The second reason for the great popularity of these investments is associated with high profitability, which other types of investments are not able to provide.

Other advantages of PAMM accounts include quick income generation and convenient ways to withdraw money.

The procedure for placing money on Forex deposits begins with finding a reliable PAMM account manager. And in order not to make a mistake in choosing, it is recommended to devote a sufficient amount of time to this stage. The profitability of the planned enterprise and the safety of the main account depend on how well the preparatory work is carried out.

3 most important criteria for choosing a PAMM account manager

Duration of work of a manager with a PAMM account. The search for a reliable PAMM account manager begins with an analysis of its activities. Detailed reports on the results of trading operations can be found on the websites of all brokerage organizations. Traders who have been working as managers for at least a year should be in the field of view of a future investor in PAMM accounts. This period is quite enough for the exchange player to learn to operate with amounts that have increased during the investment process and to adjust his trading strategy.
Stable positive result. Now, from the selected category of traders, preference should be given to the successful ones, who throughout the reporting period brought consistently high income to their investors. It is important to pay attention to the stability of the result.
The size of the manager's maximum drawdown. The third criterion for choosing a PAMM account manager is related to the assessment of the maximum drawdown that it allows. This parameter is measured as a percentage and shows what share of the deposit a trader is able to lose if the market moves in a direction unplanned by him. A high drawdown indicates the aggressive policy of the PAMM account manager and his habit of risking investors’ money. And this can lead to a complete loss of fixed capital.

As a result of the analytical research described here, a list of several traders heading PAMM accounts will be obtained. However, before you trust them with your money, you need to get more information about them. The most reliable information about PAMM account managers can be identified in the process of communicating with their investors. This can be easily done by visiting the forums of investors in PAMM account data.

Agree that Hollywood films about Wall Street have formed a special image of a trader in our brains. This is a successful and wealthy man in a neat suit, who drives an expensive car, doesn’t lift anything heavier than a computer mouse, and makes money out of thin air.

In order to try your hand at playing on the stock or currency exchange, you do not need any special education, permission or license. Now anyone can start making transactions on the stock exchange using the Internet, taking the first step towards this much-loved image of a successful trader.

But reality, as always, is cruel. And it turns out that in order to make a profit from trading on the stock exchange, you will have to learn, fail, work hard and waste your nerves. Few people manage to go through this entire difficult path to the end.

But you can make money out of thin air on the stock exchange without going through all the hardships of a professional trader. All you need is to find a successful player and invite him to play on the stock exchange with your money, and divide the winnings in half.

In order to make money on the Forex currency market by investing in successful traders, there are PAMM accounts.

How to invest in PAMM accounts?

A PAMM account is a managed account in the Forex market. Investors deposit money into this account, and the trader plays with this money. Profit is distributed among investors depending on the investment, and the trader receives a reward in the form of a percentage of the profit (most often the reward is 40% or more)

That is, any trader can create a PAMM account and start attracting investors. But why does he need this?

Suppose there is a trader who successfully trades on the stock exchange and, having invested 100,000 rubles, he has an average of 15% income per month. This means that his profit is 15,000 rubles.

To increase profits, he can open a PAMM account and start attracting money from investors. For example, Investor 1 invested 50,000 rubles, Investor 2 invested 20,000 and Investor 3 invested 5,000 rubles.

Now the account has 75,000 rubles for investors and 100,000 rubles for the trader. With a 15% return per month, the trader will receive 15,000 from playing with his own money and also a reward from investors.

On average, a trader receives 50%, which means that he earned 11,250 from investment money and will receive 50% of this amount, that is, 5,625 rubles. His total income will be 15,000 + 5,625 = 20,625.

There are traders who have more than half a million dollars in their PAMM accounts. They receive huge rewards from their activities.

The benefit for investors is also obvious and lies in receiving passive income. Successful PAMM accounts bring 100% per annum.

PAMM account operation scheme.

The manager opens a PAMM account and starts trading with his own money. If investors are satisfied with the trading result, then they decide to invest in this account.

Investors invested 40% of the total amount in the account.

In case of successful trading, the profit is distributed between the trader and investors in accordance with the initial investment.

Investors receive a profit proportional to their initial investment.

Investors pay part of the profit to the trader as a reward for successful trading.

In this case, the trader is paid a reward of 20% of the profit.

Pros and cons of investing in PAMM accounts.

Pros:

Small barrier to entry. It may seem that only large sums can be invested in PAMM accounts. But, in fact, the minimum investment starts from $10.
No need to be a professional trader. You don't need to study stock trading for years to make money on the stock market. You only need minimal knowledge to choose a reliable manager and start making a profit.
Fraud is excluded. A trader cannot steal your money, he simply does not have access to it.
Withdrawal of money at any time. After investing, your money is still yours. You can take your money back any time you want.
Ability to follow the trader. You can monitor the trader’s game from your personal account, analyzing his work.
Interested trader. Since the manager invests his money in a PAMM account, he risks not only his reputation, but also real money. I don’t even know what could interest him more in success.
Flexible risk and profitability settings. You can select different PAMM accounts for investment with different returns and different degrees of risk, distributing funds between them in any shares.

Minuses:

The only downside here is the risk. After all, people will manage your money, and they can make mistakes. Because of such mistakes, you can not only make less profit than you expected, but even go into negative territory, that is, make a loss.

Indeed, the profit from this type of investment behaves unpredictably. In some months you can earn a good income, in some months your profit may be around zero, and some months may be completely unprofitable.

The main rule of investing in PAMM accounts.

The main rule is risk diversification. Moreover, you need to start applying the principle of diversification even before you decide to invest in PAMM accounts.

Diversification at the investment portfolio level.

The fact is that advertising of this type of investment and successful cases with high incomes can mislead a person. And behind all the beauty of the picture there are very real risks. If the investor does not provide for them, he may lose money.

Diversification at the level of investment in PAMM accounts.

To obtain maximum profits and minimize risks, it is recommended to trust your funds to different traders. Moreover, the more diverse the strategies of these players are, the better.

Many companies, such as Alpari, can offer you portfolios formed by PAMM, which should reduce your risks or increase profitability. We will talk more about PAMM accounts in the corresponding paragraph below in the article.

With this type of investment, diversification by currency and markets is also used.

In order to select the most diverse PAMM accounts for your portfolio, you need to know what types of strategies traders use and what problems they will help the investor solve.

Types of traders' strategies.

In total, there are 3 types of strategies: aggressive, moderate and conservative.

But in order to describe these strategies, you need to introduce several concepts:

Drawdown is a situation where the trader and investors suffer losses. Drawdown is measured as a percentage of the total amount of money in the account.

Now let's get back to the strategies:

Aggressive score. This is the riskiest, but also the most profitable strategy.

Profitability: more than 10% per month or more than 120% per year.
Maximum drawdown: more than 50%.

Moderate score. Average risks and average returns.

Profitability: from 5% to 10% per month or from 60% to 120% per year.
Maximum drawdown: from 30% to 50%.

Conservative account. Low risks and low returns.

Profitability: up to 5% per month or up to 60% per year.
Maximum drawdown: up to 30%.

You can see these parameters characterizing accounts in the PAMM indicators of the account in which you plan to invest.

PAMM account indicators at Alpari.

The degree of aggressiveness of a PAMM account at Alpari.

You need this information to assess your risks. The more aggressive the account, the higher the potential profitability, but also the higher the risks. The more conservative the account, the lower the profitability and the lower the risks.

Now you know that you need to invest in different accounts according to the degree of aggressiveness. But how to choose PAMM accounts that will bring you profit and not loss?

1. Trader experience.

During this time, the trader must encounter at least one drawdown. This is necessary in order to understand how he copes with difficulties. After all, it often happens that managers drain all their funds at the first drawdown.

Look for other accounts of this manager. If they are still working, then analyze them and see what the profitability is. If the account is completely drained, then look at what caused the failure.

2. Drawdowns.

Pay attention to drawdowns when working as a trader. How much risk are you willing to take? Some investors withdraw their deposit when there is a drawdown of 20%. And someone trusts the trader and easily tolerates drawdowns of 50% or lower.

Therefore, choose accounts with drawdowns no greater than you can afford.

3. Trader's profitability.

Pay attention to the annual profitability and profitability for the entire life of the PAMM account. Also see how it changed throughout the entire trading period.

4. Manager's capital.

The more of a trader's own money is involved in trading, the more interested he is in success. Therefore, it is recommended to invest in PAMM accounts where the manager’s capital is at least $1,000.

5. Money under management.

A large amount of money under management indicates that this trader is trusted. And people who invest large sums in PAMM accounts are far from fools. If these people trust this manager, then he has something to trust.

This suggests a conclusion: the more money under management, the better.

6. Ratings.

Almost every brokerage platform has a PAMM account rating. They are usually sorted from best to worst. Don't forget to use this tool. You can look for good accounts in the top twenty of this list.

PAMM portfolios.

A PAMM portfolio is a set of PAMM accounts that implements the principle of diversification and is designed to reduce risks and increase investment profits. In addition, when using portfolios, the entry barrier is lower.

You can choose a portfolio yourself, or use already compiled portfolio managers.

On one's own.

Most brokerage platforms have such a function as a PAMM account constructor. You can select accounts yourself and include them in your portfolio.

After this, you will be able to distribute the funds as a percentage between the selected accounts. For example, distribute the majority of the money among traders using a moderate strategy, and entrust a smaller portion to more aggressive managers.

Ready-made portfolios.

A portfolio manager can create his own portfolio from PAMM accounts that he considers the most reliable. That is, he will do the work of selecting accounts for you. The manager must also invest his money in the created portfolio, which will force him to take the selection of PAMM accounts seriously.

After creating a portfolio, any investor can invest money in it, trusting the professionalism of the manager. For each attracted investor, the manager will receive a reward.

Risks of PAMM investing.

With this type of investment, there are 2 types of risks: trading and non-trading.

Non-trading.

Non-trading risk is that you could lose money due to fraud or brokerage closure.

With PAMM investing, non-trading risk is minimal.

The trader himself will not be able to steal your money.
If you choose a reliable broker, then the likelihood of fraudulent activity or the risk of ruin is minimal.

Sometimes you can hear the opinion of conspiracy lovers that traders conspire with brokers and steal investors' money. That is, the statistics are falsified and everything looks as if the trader is losing money, but in reality there is no trading, and the money is embezzled.

But the likelihood of such conspiracies is unlikely, so you should not take them into account.

Trade.

We have already talked about trading risk above. This is the probability that instead of a profit you will receive a loss. You already know how to reduce this risk by taking a professional approach to choosing PAMM accounts and competently creating PAMM portfolios.

Below we will talk about how to reduce trading risk after the money is invested.

PAMM investment tactics.

Loss limitation mechanisms.

Many brokerage platforms have the ability to automatically withdraw money from a PAMM account if a trader begins to suffer losses. Withdrawals are usually carried out once a day.

This is very convenient because you don’t need to log into your personal account several times a day to check. You will be able to fix the level of risk and not waste your nerves, because now the trader will not lose all your money while you are sleeping.

Redistribution of funds between accounts (portfolio rebalancing).

This tactic is to redistribute your funds between PAMM accounts after each certain period (for example, 1 month) so that they are again in the starting ratio.

For example, you invested in 2 accounts: you invested $1,000 in Account-1, and $500 in Account-2. This means the ratio is 2:1. After a certain period, Account-1 grew to $1,500, and Account-2 to $1,000. Now you need to redistribute the funds again in a 2:1 ratio. Thus, now Account-1 will have $1670, and Account-2 will have $830.

The point of this tactic is that over time, more and more funds accumulate in aggressive accounts. But, since aggressive accounts are riskier, your risks increase with more money on them. Therefore, you need to gradually redistribute profits from aggressive accounts to moderate or conservative ones.

Investment horizon.

This tactic also involves redistributing money between accounts to reduce risk - from aggressive to conservative. Only this will not be a redistribution of profit, but of the entire amount. And it will depend on time.

That is, you invest short-term in aggressive PAMM accounts, for example, for 1-3 months. After this period ends, you transfer all the money from these accounts to less risky conservative ones.

The more aggressive the account, the shorter the investment period should be, because the risks are higher.

General cleaning of the briefcase.

You must remember to get rid of unprofitable PAMM accounts. If you have an account in your portfolio that has been losing money for several months, you should consider removing it from your portfolio.

You can also add new accounts to your portfolio that you consider promising.

Reviews, bitter and sweet experience of investing in PAMM accounts.

A large number of investors suffer losses due to a frivolous approach to the selection of accounts. And some even lose all their money by trusting only one trader.

In negative reviews, people criticize the Forex market itself, traders, and convince everyone that the manager is colluding with the broker, but in fact, no one is to blame for the loss except the investor.

Conclusion.

Although PAMM investing seems simple, in reality it is not so. If you decide to select traders at random from the leaders in the rating, then such a strategy will be very risky.

You need to understand that professional traders consistently bring profits with minimal risks, while amateurs lose money or mark time. The investor's task is to learn to distinguish professionals from amateurs.

For beginners, a strategy in which a large number of different accounts is added to the portfolio is suitable. This will help avoid high risks.

But with the growing experience and professionalism of a PAMM investor, in most cases he begins to reduce the number of accounts in his portfolio, taking a more serious approach to their analysis.

Most brokerage platforms allow you to test accounts using a demo account, so you don’t even need to invest money to get started.