What is investing in PAMM?

Absolutely “unobtrusive” Forex advertising on the Internet, newspapers and even on public transport has done its job-today only the lazy do not know what the foreign exchange market is and the meaning of the words “trader”, “broker”, etc.

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More sophisticated people believe that all this is a complete fraud and deception. And only a few people who are really “advanced” in this matter know what it is to work in the international currency market. They also know the concepts of “trust management”, PAMM investing and PAMM account.

If the term “trust management” is more or less clear from the name itself, then the definition of a PAMM account requires some interpretation. The English abbreviation PAMM (Percent Alocation Management Module) defined the name of this method of investing funds.

Its essence lies in the fact that a person who has some capital and does not want, for some reason, to increase it independently, gives his funds in trust to a specialist in this field. And the mechanism of “percentage distribution” (free translation of the abbreviation PAMM) regulates, to a certain extent, the responsibility of a specialist in the field of finance-a trader, to the investor.

So, trust investing involves multiple investors depositing their funds into a specific account. This account was created by the trader in advance, based on his own funds.

The conditions for creating and operating a PAMM account are such that in the case of successful work of a trader, he receives a profit from his capital invested in this account and a part of the profit from the funds of investors, usually 30-50 percent. Also, the manager of the PAMM account does not have the ability to withdraw funds from the account of investors.

Thus, the manager is vitally interested in increasing his capital in the PAMM account. At the same time, if this goal is successfully achieved ,it automatically increases the profit of investors. For the latter, it is not necessary to understand the specifics, it is enough to choose a professional trader. All this is an undoubted plus of trust investment.

But, like any coin or medal, PAMM on Forex has a downside-risks. The risk of this method of investment is that the manager can easily “drain” all the capital. He will lose his money, but so will the investor’s funds. Therefore, it is recommended to diversify the risks and “invest” not in one manager, but in several, of course, having studied in detail the statistics of their work in advance.