Table of Contents
What is PAMM?
We should start with the definition of the PAMM. The PAMM is the system for investors, where they can receive passive income. Abbreviation decoding of PAMM is percentage allocation money management. There are three entities in the system, an investor, a trader, and a broker. The investor is looking for a way to increase capital returns and trust his money to the trader. Traders want to earn the performance of trading operations in the market, increase the investor’s capital and take the percentage from the successful deals. Brokers give the platform for cooperation between trader and investor, offering guarantees of security and transparency of all transactions, and offering the investor the PAMM accounts.
The PAMM account is an account where the investor allocates its money to transfer by proxy to the trader for a capital increase in financial markets.
The motivation for the rational use of investor capital is that the same trading transactions that are carried out on the PAMM account are also carried out on the trader’s account.
Using PAMM is still risky, investors can incur losses or even lose the capital caused by bad deals. To diversify risks, it is recommended for investors to use the PAMM portfolio. PAMM portfolio is the group of PAMM accounts that are ruled by different managers (traders).
So if you lose money on one account, you can make up for it on another.
From all the information above, we can conclude that the success of using PAMM is highly dependent on the manager who operates the account.
You don’t have to worry about the safety of your money, as a trader cannot withdraw money or conduct other transactions outside the market.
How to choose a PAMM account?
Some investors are tempted to choose young traders who have only recently started to manage their capital. This is due to the rather aggressive and sharp trading strategy of young traders. It seems that this strategy can bring more income, but it comes with a lot more risk.
Therefore, the first advice for choosing a PAMM account is the choice of an experienced and rational trader. It is also important that capital drawdowns must not exceed thirty percent.
The PAMM account ought to comply with all legal requirements, if a trader uses the services of an unlicensed broker, then if the broker or trader fails to fulfill his obligations, he may not receive proper protection from the state.
For your comfort, we prepare a list of the best PAMM Brokers allowed to trade in India.
How to make money with PAMM?
A few tips, on how to be profitable with PAMM:
- Use the services of a reliable broker so that the trader does not have the opportunity to conduct transactions bypassing the PAMM system;
- Use the mechanism of loss limitation;
- Invest small amounts to get started;
- Differentiate your risks, and use the PAMM portfolio.
That is all basic information about PAMM accounts and how to be profitable with them.