What is PAMM?
PAMM stands for Percent Allocation Management Module. It is mainly about allocating your money into a fund manager's trading account and then you will earn certain proportion of profits that the PAMM manager has made from his or her trading activity. A growing popularity of Forex has encouraged new investors to join in the vehicle to make money from home. So some don't have enough time and skills to trade Forex successfully so they have the choice to put in their money for someone, believed to be successful in his/her trading career, to do all the trading for them and then the investors will have to share certain proportion of profits to the manager for his/her service.
Digital technology has revolutionized over time in order to fit into this type of business. Without PAMM technology, people have to withdraw profits and pay the managers on manual transactions. So people living in different countries cannot achieve this transaction and they won't even know each other. So this will happen only for people who are living in the same area with also close relationship.
This is where PAMM comes in to kick out this issue. People now just have to pick the traders with the optimistic portfolios. It is their choice as the brokers will show the transparent information about the rank of fund managers in PAMM. They sort them out and give them rate and ranks so that you don't need to spend days or months to even pick one manager.
What is interesting is everything is handled and automated by the computer system. Investors in PAMM will have monthly contract with the manager. After a month has passed, the settlement of profits will be done automatically. You just need to know before hand that how many per cent your manager charge for monthly profits. It varies according to different managers.
Before you invest in a manager account, you have to sign a contract of agreement between you and the manager. The contract talks about the charged percentage of profit and the risk in putting your money for the manager to manage. The risk here means if your manager makes profit for the month, you will agree to give the charge for the service and in case the manager loses money for the month, you will agree to lose your money in your account and you won't pay any money to the manager in this case. If the manager causes loss of your money in the pool, you don't have rights to argue against or take any legal action against the traders because financial market trading always has risk in it. You agree that you trust that manager and if the manager loses money, you agree to lose too with concession.
How Does Money In the PAMM Pool Work?
Let's say the fund manager Alex has 3000$ in his own account. Peter, Jack, John, and Maria want to invest in pamm service by choosing Alex as their fund manager because they have viewed and been satisfied with the trading performance of Alex. Peter will join the pool with 1000$, Jack 500$, John 1500$ and Maria 300$.
So now the pool Alex is managing and trading has the total account balance of 3000+1000+500+1500+300 = 6300$. We will convert each into percentage of the whole account.
Alex (fund manager) = 3000/6300 * 100 = approx. 47.62%
Peter = 1000/6300 * 100 = approx. 15.87%
Jack = 500/6300 * 100 = approx. 7.93%
John = 1500/6300 * 100 = approx. 23.81%
Maria = 300/6300 * 100 = approx. 4.76%
Checked: 6300$ = 100% = 47.62 + 15.87 + 7.93 + 23.81 + 4.76 = 99.99%
So we are right!
At the start of the trading term, all the parties have agreed upon the contract of 1 month trading. Let's say Alex, the fund manager, is able to make 40% of the whole pool of 6300$.
So 40% of the total fund = 40/100 * 6300 = 2520$
The main balance now is 6300 + 2520 = 8820$.
But the fund manager will charge 20% for his trading service of the profit gained.
So the fee = 20/100 * 2520 = 504$
The left fund to be shared among all the parties = 2520 - 504 = 2016$
Now we will calculate the profit for each party.
Alex (fund manager) = 47.62/100 * 2016 = 960.0192 $
Peter = 15.87/100 * 2016 = 319.9392 $
Jack = 7.93/100 * 2016 = 159.8688 $
John = 23.81/100 * 2016 = 480.0096 $
Maria = 4.76/100 * 2016 = 95.9616 $
Checked: 960.0192 + 319.9392 + 159.8688 + 480.0096 + 95.9616 = approx. 2016$.
We are right!
After the contract ends, the investors may choose to withdraw some or all of their money available. They also can decide to re-invest some or all of profit plus capital with the fund manager but they have to renew the contract with the fund manager.
So that's simple how it works in PAMM pool.
Where Can We Find A Reliable PAMM Investment Broker?
Actually we have seen many brokers that are introducing PAMM service to their clients. However, I recommend you to join Alpari. Alpari is one of the pioneering brokers that provide PAMM investment service. Besides, Alpari is a long time Forex broker regulated fully by financial authorities around the world. The process of registration is simple and there are various payment methods to suit all your needs. It has been awarded with many trophies in the field and fewer required documents are needed to fully work with the broker according to various payment methods you use.
One more advantage of Alpari is that many professional and experienced traders are there. Some of fund managers are controlling million dollar account for PAMM investors. They have enough information and rating about each PAMM manager so that you can find the best PAMM manager you like to invest in. The broker can allow investors to start investing in PAMM or Forex trading with just 10 dollars or Euros.
To conclude, it is now easier than before to let your money work. Technology has created many opportunities. As you know, saving money in these days will not give you satisfactory rewards in the future as the world economy is not so stable as before. Why not let it grow itself with a trusted manager? You just need to learn how to assess risk and take some risk, and your life and wealth will prosper faster than you expected.
JOIN ALPARI
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