Each of us sooner or later thinks about how you can improve your financial well-being. Someone for this is looking for a new job or improving their skills as a specialist, someone finds a profitable business in their favorite hobby. One of the methods gaining popularity today is investing , operations in the securities market and currencies. Consider one of the directions of this type of earnings – investing in PAMM-accounts.
What is a PAMM-account? This is a single account that is managed by a group of investors and their accounts; however, only the account holder has the right to order. In simple words – the PAMM-account holder provides a part of his funds to the trust management of a trader or a group of traders to conduct various operations on the Forex market with the receipt and distribution of profits.
Pros and cons of investing in PAMM-accounts
One of the main advantages of a PAMM-account is the distribution of profits in equal percentages. That is, if the PAMM-account manager receives a certain percentage of profit, then the investor receives an equal percentage. In addition, this form of management does not require a huge amount of time and effort from an investor – no need to study operations for a long time, closely follow all the trends of the exchanges, and so on. Investing in PAMMinvolves the work of an interested person, not an investor. Yes, and you can start your business in this area of investment with the most simple and small amounts.
Another important point is that a trader risks not only the investor’s money, but also his own money. Because the PAMM-account is protected from risks. In addition, it should be noted that by choosing a successful trader, each investor can save and increase their own funds in the account. And investing in PAMM brings attractive interest rates – up to 150% of passive income.
It is also worth noting that in addition to the technological and economic aspect, which ensures the reliability of the PAMM-account, there is also a moment of insurance. Some insurance companies are interested in this type of business, therefore they gradually master the market, providing an opportunity to insure their funds additionally against possible losses.
However, there is one point that is difficult to overcome. This is an imperfect legal framework governing investment in PAMM. It should be understood that there are practically no legislative acts in the field of PAMM-accounts. And to return the lost amount of funds through the court will be impossible. Therefore, it is not worthwhile to succumb to tempting offers to increase your profits by circumventing the broker’s control system or turning in “profitable” brokers to investors. At a minimum, they must be carefully examined.
How to choose a profitable PAMM-account for investment?
For this, there are several basic features of a reliable PAMM account. First of all, the age of the PAMM-account. If the account exists for less than a year, then surely before the investor is a novice trader. And its profitability can be considered doubtful. You should also pay attention to the relative drawdown, that is, the maximum amount of losses that this trader has suffered in its activities. It will also be a vivid reflection of his work style – more aggressive or stable. Of course, aggressive traders can bring in up to 150–200% profit in one transaction, but the risk of losing them is very high.
Attention is deserved and the amount of capital from the owner of a PAMM-account. If it is small, then this may indicate a trader’s uncertainty and excessive caution. The greater the capital, the greater the interest of the trader in a successful operation – he is aware of the responsibility for his transactions. This is also indicated by the amount of PAMM funds invested and entrusted to the trader. The more of them, the more effective the trader conducts its activities in the eyes of other investors.
In general, in order not to lose in this area, it is worth dividing your capital into several parts, without investing everything in one PAMM account. After that, it is worth being cautious, consider the strategies of your traders, analyze their profitability and risks of work. All this does not require much time. But such little things can save money, which is very important.
Thus, investing in PAMM accounts is not only fashionable, but also a very profitable business. Therefore, it is worth paying attention to anyone who wants to receive a stable income. However, without a minimum of prudence and miscalculation of their investments, investing will only lead to loss of funds, and not to the desired increase in equity.