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The advantages of PAMM-accounts
You may have heard about PAMM accounts for Forex trading, and may have wondered - what is it?
In short, a PAMM account allows one trader the Manager to trade on behalf of other investors who are actively involved in the trading process.
In a sense, one can draw an analogy with the methods of work of investment funds operating on the stock market, although there are some very significant differences.
How does a PAMM-account?
First of all, the Manager opens the account and within this account identifies some of their investment as a so-called capital of the Manager. The Manager is deprived of the opportunity to withdraw funds from this capital. The main purpose of this capital is to assure potential investors that a Manager PAMM account is ready to manage with full responsibility.
Further, the Manager is touting the results of their trading, indicating the terms on which he offers to join his trade and to other investors - for example, the share of profits that the Manager receives when trading on behalf of the investor. This is usually done through a Forex broker, which in this case acts as a guarantor of the transparency and security of investment in the PAMM. However, we note that the company-the broker is not responsible for any losses in trading process.
Then, in the case involving investors who invest in the most attractive for them personal accounts of successful managers, and at the end of each reporting period, the trading profit or losses for these accounts are divided between the Manager and his investors. A Forex broker can manage the distribution of funds, acting as a regulator and as a kind of instrument of escrow.
What are the advantages of PAMM accounts for managers?
For successful traders of the advantages of using PAMM-accounts is quite obvious. This gives the Manager the ability to perform the role of a personal Manager to its investors, making a profit not only from their own money, but also agreements on behalf of the investors in their funds. Also, managers can set their own terms, and investors obviously need to sign the contract, agreeing with them – such as the percentage of distribution of profits and settlement trading period.Because the funds in PAMM-account are allocated automatically, this eliminates any risks for the Manager from fraud on the part of investors.
What are the advantages of PAMM-accounts for investors?
Contributions of investors in the PAMM account gives them numerous advantages. First, they get profit from the trading activities of successful managers and professionals. Second, they have the opportunity at any time to withdraw their funds from the PAMM-account, if they are not satisfied with how acts on the market their Manager. Thirdly, they can diversify their investments through the opening of several PAMM-accounts, thereby reducing risks. Finally, they are also protected from fraud managers because of the automatic funds distribution mechanism.
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| Category: Forex | Added by: (30.10.2017)
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| Views: 253
| Rating: 0.0/0 |
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