Out of all forex money management systems in the forex market, PAMM system is the best for investors with a low-risk tolerance specifically. Comparatively, the volume of the deposits affects the investors’ portfolio in a PAMM system.
PAMM stands for Percentage Allocation Management Module. The name itself tells what it is. The trading is developed in a pooled-in account whereas the profits are divided based on the percentage of each individual pooler’s investment.
When the total managed funds are 10,000 USD, let’s assume
- 1st Account has 50%, which equals to 5000 USD
- 2nd Account has 30%, which equals to 3000 USD
- 3rd Account has 20%, which equals to 2000 USD
And if the account manager does a move which gains 1000 USD profit:
- 1st Account will get 500 USD of the profit or 50% of that 1000 USD
- 2nd Account will get 300 USD of the profit or 30% of that 1000 USD
- 3rd Account will get 200 USD of the profit or 20% of that 1000 USD
Additionally, the money manager would charge a nominal performance fee for their services. This would be charged from the profits earned. The same logic goes for the losses too.
Merits of PAMM over MAM and LAM:
- Since each account has its unique ratio, PAMM paves the way for the financial participation of the manager. Thus, the manager will be trading with keen interests which results in their active participation.
- Most money managers prefer this system as it has flexibility in investment conditions. Eventually, the trading reports could be possible as the manager needs.
Investors get the option to monitor trades in real-time. Therefore, an investor in PAMM gets more control over his/her investment.
Launch FXM provides such a PAMM system with which you can start managing your investments for a brighter Forex trading. Check out our affordable services.