📉 PAMM accounts: how to make money on the Forex market

Many people know that earnings on the Forex market are made through speculation, that is, buying and selling assets. As a rule, currency pairs act as assets.

The principle of Forex trading is simple: buy dollars for euros, wait for the exchange rate to change and sell, receiving a profit or loss. But not everyone knows that it is not necessary to take direct part in trading, as you can simply invest money in PAMM accounts and receive passive income.

Attention! For a beginner, the risks of trading on Forex are very high: the probability of losing all invested money is ~100%! In order to learn how to trade profitably, you need years of studying this market. Losses of investments are usually caused by gross errors in trading and incorrect entry into the market.

How does a PAMM account work?

There are 4 sides:

• currency market;
• broker;
• managing trader (PAMM account owner);
• investor (you).

The broker provides traders with the opportunity to participate in trading on the currency market. The managing trader conducts speculative trading to make a profit. To increase turnover and profit, the manager attracts investments from other participants.

The investor invests his money in the PAMM account and has the right to receive profit. The investor cannot influence the actions of the manager, but he can withdraw money from the PAMM account at any time.

For example, the managing trader “Trader” opened a PAMM account called “P”, which has $5,000 (this is the manager's money). The trader accepts investments on the following terms: – free input/output of money;

• minimum deposit: $100;
• commission: 40% of each investor's profit.

As you can see, the manager risks his own money when trading. Therefore, it is in his interests to conduct productive work, because his profit depends on it.

ExampleInvestor “A” invested $1,000 in PAMM account “P”. A month later, it turned out that the account had grown by 10% due to the trader's successful trading. It turns out that the investor's share also grew by 10%, i.e. he received a profit of $100. Of this, 40% is due to the manager under the terms of the deposit. As a result, the investor can withdraw $1,060.

Advantages of investing in PAMM:

• This type of deposit is available to everyone;
• you can withdraw your money at any time;
• information about accounts is publicly available: any investor can track the manager’s actions;
• high profitability: income of 100% per year is a completely realistic figure;
• the ability to diversify investments by investing in several PAMM accounts.

How to invest in PAMM accounts?

First, you need to choose a broker, register on their website, open an account and top it up with a card or electronic money. There are 5 forex brokers:

• FXOpen;
• Weltrade;
• LiteForex;
• Grand Capital;
• Instaforex.

Each broker has its own PAMM account rating. When choosing, you need to carefully study all accounts. It is necessary to pay attention to profitability, term, number of investors and total capital. If the account is younger than 1-2 years, it is better not to invest money.

Profit indicators should be studied for the last 12 months, or better yet, for the entire period of existence. After all, it may turn out that in March 2018 the account gave a profit, and in the previous six months there were only losses.

Main risks of PAMM account

Don't forget about the risks. A manager with a high reputation will certainly not intentionally go into the minus. But there is no guarantee that he will conduct productive trading. To reduce the risk, you need to split the capital into parts and invest in several PAMM accounts.

For clarity, let us give two examples:

• You invested $1,000 in account “A”.
• You invested $500 in account A and $500 in account B.

Let's say “A” brought a loss of 30% in a year, and “B” brought a profit of 60%. In the first case, the investor lost $300. And in the second case, he even made a profit in the end. This is just an example, and in practice everything may be different, but it is much safer to split the capital into several parts.