In general, only a small percentage of traders can truly enjoy profitable results in Forex trading. Due to this, many investors are seeking for alternative options, such as a company or a broker that offers managed accounts services.
Managed accounts basically provide an opportunity for money managers and traders to meet up with investors in every part of the world and to offer their trading services to clients.
Through a managed account the money managers are managing and trading the accounts and portfolios on behalf of their clients usually in return for a percentage of the profits they generate (performance fee).
In theory, the investors in a managed account don’t need to understand, have skills or know anything about the Forex market. All that is needed is for them to fill out a few forms, deposit the money and let the money manager take care of their capital. But of course, basic knowledge about the forex market and a wise risk management are always useful for investors considering managed accounts.
There are different managed account platforms available these days, but amongst all, one managed account type seems to be the talk of the town.
Forex Percentage Allocation Management Module or PAMM accounts as they are popularly known have been garnering traders’ attention probably because of the fact that they come in the form of “pooled money Forex trading”.
This is when the investors have the chance of allocating their capital in the desired proportion to a qualified money manager or several money managers of their choice.
The money manager of a PAMM will be managing multiple Forex trading accounts by using his own capital and pooled money together and will aim to generate profits consistently over the long run.
The whole process is facilitated by an intermediary, such as a broker that will lay the groundwork for the PAMM process to go smoothly and will allow the money manager to conduct discretionary trading services for the client that could either take place via automated or manual trading.
How do PAMM accounts actually work?
All in all, a PAMM account is a simple yet hassle-free method for investors to invest in Forex trading by selecting money managers to trade for them.
Investors are able to profit with minimal efforts in PAMM account in contrast to trading by themselves which requires a lot of knowledge and experience. Although it is generally a safer way of Forex trading, a PAMM investment still carries the risks of losing capital due to the performance of the manager.
All investors that are considering PAMM accounts are, therefore, advised to take their time and diligently select a broker and an account manager to minimize the risk of choosing an unprofessional to manage their investment.
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