SUMMARY
FUND MANAGEMENT (PAMM) is an investment service that allows investors to deposit funds in a trust fund which is managed by the MONEY MANAGER. The money manager is a trader like any other trader with set of skill and discipline in managing the investors’ funds. The skill involves imploring a simple yet result bearing strategy and proper risk management.
In return for the trading service provided, the money manager receives remuneration from the profits for managing investments.
WHAT IS PAMM?
Percentage allocation management module, also known as percentage allocation money management or PAMM, is a form of Forex trading that implies the transfer of assets on a trading account into the trust management of a selected trustee for conducting operations in the financial markets.
PAMM-type investment system concentrates all funds of the investors, connected to a particular offer, in one account, which is managed by the trader. The account manager DOES NOT HAVE direct access to these funds, WHICH ELIMINATES non-trading risks. Profits and losses are distributed in proportion to the share of each participant according to the size of the investment. The minimum amount of investment, its terms, as well as trader's commission, are always REGULATED by the public offer which is set by the Money Manager during creation of the offer.
Profitability is heavily dependent on the strategy, discipline and risk management of the trustee. It is crucial to understand that losses are inevitable in forex. However, proper risk management allows us to stay in trading for long as well as enjoy the benefits of it.
WHAT ELSE DO YOU NEED TO KNOW ABOUT PAMM?
A trusted PAMM manager (account manager, controlling trader) is usually a trader who publishes statistics on his trades, and who takes over the management of other investors' funds.
The main value of such a system is the technical simplification of interaction between the manager and trustees, which includes automatic monitoring of PAMM-accounts, the reception, and return of funds, the distinction of own funds of the trader and the trustees.
WHAT ARE THE ADVANTAGES OF PAMM?
- The relative safety of the investor's capital, since managers HAVE NO direct access to the funds.
- Ability to REDUCE TRADING RISKS through diversification and investing in accounts with different strategies.
- Virtually UNLIMITED returns.
- There is a HIGH DEGREE OF RESPONSIBILITY on the part of the manager since their funds are also involved in trading.
- The PROFITABILITY POTENTIAL is quite high because investors can start receiving returns as soon as the account is opened through ONGOING MANAGER POSITIONS.
WHAT ARE THE DISADVANTAGES OF PAMM?
- Higher risks for investors. Even opting for a trader with a good history does not guarantee profit and protection against losing the deposit. (NTA covers this with our risk management Plan)
- Possible INFLATED MANAGER commissions. Many managers unreasonably increase commissions, arguing it with the trading performance or experience. In this case, a broker can act as a regulator, so as not to scare clients away from their investment service. (NTA is set a justified commission of 25% of the profits made)
- Penalty for early withdrawal of funds. Some managers allow withdrawals only at the end of a trading period, which may not suit potential investors. (NTA withdrawal are set at the end of every trading period which is weekly. This is because we avoid to have running trades over the weekend. NTA has no penalty for early withdrawals)