PAMM account is a contemporary fashion trend (like binary options), appeared in the former Soviet Union relatively recently. At its core it is the transfer of money in trust management to professional traders who dispose them at their discretion. In theory, a contract offer is needed between an investor and a trader, however, modern technologies allow you to invest in PAMM-account remotely. Partly it is convenient – it is possible to invest in a PAMM account within 20 minutes, but this has the disadvantage that the PAMM-account can be empty, created for fraudulent reasons.
PAMM-accounts differ in return (and therefore level of risk) and minimum investment amount. The average yield on the accounts 30-80% per annum. Agree, sounds good compared to bank deposits. The minimum amount of investment is around $ 1,000. Quite a lot, but there is nothing to do with less money in international stock markets.
To invest in PAMM-account: most profitable passive investment
How to safely invest in the PAMM-account:
serious approach to the choice of dealing center, which will open a PAMM-account. If the broker already has open accounts, to perform each of them by viewing the statistics of return over the last 12 months;
refuse investments, if a PAMM-account opened 6 months ago. As practice shows, the most profitable PAMM-accounts show in the first months of its existence, but they are most at risk of failure in case of failure of a trading ideas of a trader. The desire to invest in PAMM-accounts that are less than six months can be compared with the decision to invest in venture projects;
develop a portfolio of several PAMM-accounts, to diversify risks;
to perform permanent control over the profitability of the trader.
To invest in PAMM-account, you are choosing a broker to register a personal account and replenish the account. Then even simpler: it is enough to press the “invest” button and follow the instructions of the broker.
And some advice:
please pay attention to the shopping experience of the trader (if there is such information). Successful people perform stock trading. And it will not be difficult to find the reviews about the trader with the help of Internet;
specify the amount of subsidence in earlier trades of the trader. Few people manage to regain positions after a drawdown of 90%. If the maximum loss of capital amounted to 20-30%, this is a plus. Also note the number of drawdowns: if they are small, but frequent, this suggests that the trader doesn’t have the trading strategy, and therefore its investment is subject to risk;
within each of the PAMM-account (monitoring) there is a leverage bookmark. Please check the image below:
It would seem, judging by returns (the graph in the lower part of the figure) the yield of PAMM-accounts is quite good, but there is the graph at the top of a deposit. Please note that drawdown yield was accompanied by the growth of the deposit, i.e. the trader increases the volume of the transaction after each of losing money. This means that the martingale tactics is used, but with such type of account we strongly recommend you not to get involved.
invest in the time of the drawdown (and it happens to every trader). If you understand the trader’s strategy, then you will also be able to assess whether the drawdown is dangerous and deep. Most inexperienced investors on the contrary are investing at the peak of the PAMM-account in the hope of its growth, and exit at the bottom, fearing that the loss will be even greater;
avoid investing in PAMM-accounts where the trader in a short time showed a high yield (200% and more) – it is likely a trivial promotion (advertising) of account, which, after attracting money “will merge”
Summary. PAMM account is a good and real way for passive income. There is no need to “merge” the investment for professional trader, because his reputation is at stake. We recommend to invest in PAMM account only to TOP 10 brokers, which not only controlled by the portfolio, but also carry out functions of the broker. These companies care deeply about their reputation and cooperate only with those traders that do know how to make money.
It is not recommended to contact the brokers that doesn’t have access to world stock markets, because domestic instruments are futile. Also recommend with great caution to trust the private (individual) traders active in offering trust. Keep in mind that when working with a broker, you can apply for a broker’s complaint to the regulator, private traders are not regulated by anything like that.