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How to invest in PAMM?
Today at the website about Forex we will look closely at the process of selection of PAMM-accounts for effective investment. It is not strange, but the investment leaders in the PAMM ratings, usually very quickly turn into "bagels". This is not surprising, since in the first place are often managers who are not considered risks in their trading.
Properly formed investment portfolio in the foreign exchange market is a stable passive income per month is able to cover the annual interest on deposits offered by banks. Taking into account the recommendations that will be in this article, You will be able to make your money work harder, and with less risk.
Contents:
• recommendations for choosing a PAMM platforms
• investment portfolio PAMM
• analysis of the work of governors
• how to invest in PAMM your capital
Before you start learning how to invest in PAMM, I recommend to pay attention to several articles on such concepts as PAMM, diversification and portfolio investment:
• PAMM account
• What is diversification
• Portfolio investment
• Review of PAMM-accounts
Guidelines for choosing Forex platforms
First we need to determine the companies that offer their customers investment services. Such organizations a large number, and with a large assortment can be found here. Now you should pay attention to several important points when choosing:
• duration of operation (please note how long the broker provides its services on the market. He could open service investment recently, but how long has he been present on the market?)
• the presence of a yield curve in the monitoring (well, if each account is a profit chart of PMMA, it will help in analyzing the operation Manager)
• a sufficient amount of statistical information to assess the performance of managers (if the information is scanty, it becomes hard to analyze the trade traders)
• feedback about the broker (you need to make sure that there are no financial problems with the company, for example, delays in payments, hidden fees and so on)
Additional factors for the assessment of the whole PAMM system can be:
• having accounts with a long history (by year)
• stars out there are traders, well known on the forums that have other investment deposits in systems different brokers (experienced trader will not be likely to open a new PAMM account in the dubious company)
Investment portfolio PAMM
The amount we are willing to allocate for investment in the PAMM account, we call capital. To make it easier to continue to give examples take capital equal to $2000. This sum we will divide into two parts, one of which will receive 80% of the capital and the second 20%. A large share, we invest, and what we will need next the second sum, we'll talk later.
Using the recommendations in the previous paragraph, we choose several PAMM systems, for example, 3. Next, we need to decide what risks we accept in the process of investing. It is conditionally possible to divide all the options into three categories:
• conservative method
• balanced
• aggressive investment portfolio
Recommend staying on one of the first two, as the latter option is suitable only to investors who are willing to accept the risk of losing the entire capital for higher returns. As a rule, such attempts do not lead to an increase in the amount and its reduction.
What is the difference conservative and balanced methods of investing? You've probably guessed, it's all about the composition of the portfolio, which we will fill with PAMM accounts. About how exactly to analyze the work of the Manager, we will discuss in the following paragraph, and now we are more interested in strategic issue - how to distribute the share of our portfolio?
Need to get accounts that we classify as conservative, balanced and aggressive. Note that even in a conservative investment portfolio may be present in a small number of assets belonging to the category of aggressive. However, the proportion of such accounts in percent of the total capital must be small.
Here is an example of a balanced portfolio (account number No. 1, No. 2 and so on):
No. 1 - conservative PAMM system 1, $150
No. 2 - balanced, system 1, $250
No. 3 conservative, 2 system, $150
No. 4 balanced, 2 system, $300
No. 5 - aggressive, system 2, $150
No. 6 - balanced system 3, $300
No. 7 - balanced system 3, $300
So, we've chosen 7 of PAMM-accounts in 3 different investment systems. Two deposits are classified as a conservative trade, four balanced account and one aggressive PAMM. As we were balanced portfolio, conservative and aggressive accounts have smaller share.
Now we have risk diversification in PAMM systems, as well as in different accounts. Spreading amount ($1600) with a different Manager we hold in reserve the remaining money ($400).
Analysis of the work of governors
For a start, here are what we will pay attention in the work of the managing trader:
• chart analysis of profitability
• profit factor
• maximum drawdown
• the number of transactions
• the duration of the trade
• trading methods used by the Manager (if known)
You can look here these parameters:
• the average values of the profit and loss
• the Sharpe ratio
• the number of symbols involved in the work (if known)
You should make a small digression to refer to classes of risks:
• conservative attitudes - maximum drawdown less than 15% over the trading period, which shall not be less than 6 months.
• balanced configuration - maximum drawdown no more than 30% over the trading period, which shall not be less than 6 months.
• aggressive setting - the maximum drawdown is not limited
Naturally, the profitability of the account must be proportionate to the risks, otherwise there will be no sense to invest in a PAMM money. To properly invest in the PAMM account, you need to start to learn how to evaluate the work of governors.
Important the duration of the trader. For example, it may be recommended not to consider options that have statistics less than 6 months. It should take into account the success of the Manager before the opening of the investment proposal. He may have deposits with long-term statistics, and money he decided to open only recently.
The number of transactions concluded by the trader, you also need to take into account. Agree that the probability of a large error in the conclusion, for example, 10 transactions. Skilled speculators I must say that it is "not statistics". To speak of stable and confident work of the Manager is possible only after it will be signed at least 100 deals.
Profit factor displays the ratio of the total profit gained in the process of working on the market for a selected period of the total loss. The higher the rate, the better. It is not recommended to invest in PAMM accounts that have a profit factor less than 1.3. If the value is greater it means that the trader earns a profit on the transactions is much larger than the losses, without which no trading can not do.
The maximum drawdown will indicate how much has been the loss of the Manager. If it would be a conservative investment account, with a maximum drawdown of more than 15%, perhaps you should refrain from investing. Balanced account, in my opinion, should not show a value greater than 30%. Aggressive trade can be any size the maximum loss.
You can say, and the right to only look at drawdown, not saying anything about profitability? In fact, the evaluation of any PAMM account is complex, and yield potential option will not be disadvantaged because we're looking at the profit factor.
If the estimate is conservative and balanced accounts in the first place are risks that are evaluated by the investor, when choosing aggressive PAMM account people are increasingly looking for yield.
If you have any information about trading methods of the managing, it also will help eliminate some options. Some investors are not satisfied with martingale, others don't trust scalpers, for example.
How to invest in PAMM your capital
In this paragraph I would like to mention those 20% of the capital that we will not put. The fact is that these funds we reserve for increase shares in the already employed by us PAMM accounts or to invest in new deals. It is important that at regular intervals, for example once a month, the investor evaluated the results of governing, which we have invested, as well as through new options in the ranking.
If you receive a very promising account, it is possible some of the money with $400 to invest in this Manager. Another option is in a drawdown period one of the managers, in which we have already invested, to invest additional funds. If we picked a good PAMM, you need to remember that sometimes there are losses all traders.
This means that there is a sense in such a bad to trade time to enter additional money, because it becomes more probable resumption of the positive trend. The figure below shows high points for attachments.
How to invest money in PAMM
If we see that one Manager trades for a few months worse than before or just show concerns about trading one of the traders, is to reduce investments in this PAMM, transferring part of his share of the more promising accounts. Such a situation can be observed when an investor holds its regular evaluation of managers.
Perhaps even those of the recommendations and tips You read in this article will be enough in order to improve the efficiency of their investment. I hope that at least partially managed to answer the question of how to invest money in the PAMM.
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| Category: Forex | Added by: (30.10.2017)
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| Views: 302
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