Can You Put A 1 Month Old In A Pool Forex: Investing With PAMMs

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Forex: Investing With PAMMs

Define PAMM

Let’s first define what PAMM is: it stands for Percentage Allocation Management Module. Simply put, a fund manager manages a pool of money. The pool is (usually) made up of several investors, each of whom owns a share or percentage of the pool. When the fund manager opens a position, the position is allocated to all investors’ accounts as an equivalent percentage of their share in the pool.

For example, if I have $10,000 and the money supply is made up of $100,000, that means my percentage is $10,000 / $100,000 = 0.1 x 100 (to get the percentage) = 10 %. My share of the pool is therefore 10%. Now, if the fund manager opens a 1 standard lot position in the market, my account will need to open 10% of 1 standard lot, or 0.1 standard lot position.

Why have a PAMM account?

There are people who have money to invest but they just don’t have the time, expertise or patience to trade the markets on their own, so they prefer to give their money to someone else who has these skills and does it for a living. Your money will automatically grow (assuming a good trader controls it) more than if it were in a bank and you still have full control of your account. You decide when to invest and when to stop. The trader never has access to your money and most brokers also offer protective stops which eliminate the risk of account destruction.

Advantages of investing in a PAMM

1. You don’t need any Forex skills to make money, just connect your account to PAMM and the rest is done automatically.

2. You can keep your day job or business and earn money from two sources of income. The money will grow when invested in PAMM.

3. You have complete control over what happens to your account and can stop investing and withdraw the money almost instantly. If traders lose X pips or Y% of capital, you simply stop trading.

4. No one can touch your money unlike some fund management services that require you to deposit money into their system. With the PAMM you are the only one to receive the money.

5. Professional traders usually charge 20% of the performance and even with such a commission they manage to earn more money than you in the same period.

6. They trade all day because they are professionals whereas you can only trade after work most of the time.

7. With good capital, you can expect to earn enough to pay for a second salary.

Disadvantages of investing in a PAMM

PAMMS are great, but there are also some downsides you need to consider when investing your money with them. Not everything is rosy, there are also spikes on the road:

1. You don’t know who’s on the other side of the line, so you trust someone you don’t know with your hard-earned money. Make sure to read the profile very carefully about his trading goals and how he handles money. Do not opt ​​for PAMMs that are one month old and already yield 120% per month. These PAMMS rarely reach the second month.

2. If the PAMM has not performed for six months or more, you are entrusting your money to a very high-risk system that can lose all your capital if you are not careful to withdraw the money on time. PAMM trading comes with risks, especially for investors looking to earn more than 5-10% per month.

3. There is no way to tell when traders change their trading methods from good to bad and so you never know when you may start losing money.

PAMMs are perfect for traders who are not as skilled as professionals or who simply do not have the time or patience to trade. PAMMs are very secure and transparent these days. Contrary to what you may read in some forum reviews, PAMMs cannot steal money from accounts, PAMM traders have permission to trade the money only and can never touch or withdraw it.

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