You don’t always have to be a successful trader to succeed at Forex if you can identify a professional willing to trade for you. The appeal of this approach is obvious for those who want forex exposure and lack the time, will, or ability to do it themselves. As with anything else that requires skill and experience, most people will get much better results by hiring a professional.
The forex managed account brings investors and traders together, allowing investors to earn on the Forex market without trading on their own and managers to receive additional income through efficiently managing investor funds.
The whole trick is in knowing how to locate a trustworthy, competent, and cost-effective professional. As with packaged auto-trading systems or EA Forex, the quality of the forex managers' product offered varies dramatically. The big problems with picking professional forex managers are:
The one huge lesson you’ll learn from sitting through so many unconvincing, amateurish presentations from reputable institutions seeking to manage funds under your control is this: if these clowns are getting people’s money despite their weak presentations, ﬂimsy qualiﬁcations and/or short track records, then there must be vast herds of investors who seek professional assistance yet don’t know how to pick the winners. If you’re one of them, that’s ﬁne. We all have to start somewhere. Just use common sense and do your homework. If that’s beyond your resources, seek the advice of someone both trustworthy and qualiﬁed who can refer you to trustworthy forex professionals, or at least guide your decision making the process and feed you the right questions to be asking.
The best forex managed account called PAMM Account is a service of collective investing in the Forex market. The forex PAMM account accumulates a certain pool of traders (PAMM Traders) with certain experience, developed trading skills, and most importantly, good profits. Another group of PAMM account participants is PAMM Investors who invest their money in PAMM Traders, receiving parts of the profit proportional to their investment.
PAMM stands for Percent Allocation Money Management or Percent Allocation Module and has 3 major benefits:
Step 1: Experienced trader 1 opens a PAMM-account, deposits it and becomes its manager. He invests his own $5.000, publishes the offer and waits for investors. Investors 2, 3 and 4 learn the trading history and money manager’s offer and consider them to be a lucrative investment.
Investor 2 deposits into the PAMM-account $1.000, investor 3 - $10.000 and 4 - $50.000. The total investment amount is $66.000 now
Let’s see how this profit is divided among investors:
- Investor 1 (Account Manager): $2.000
- Investor 2: $400
- Investor 3: $4.000$
- Investor 4: $20.000
Let’s look what each party gets after expiration of the investment period:
- Manager 1: $5.000 + $2.000 + $80 + $800 + $4.000 = $11.880
- Investor 2: $1.000 + $400 - $80 = $1.320
- Investor 3: $10.000 + $4.000 - $800 = $13.200
- Investor 4: $50.000 + $20.000 - $4.000 = $66.000
Here are some pointers.
Unless you’ve got some very sharp and trustworthy advisors who can steer you to someone proven, and are among the high-net-worth types they seek, skip down to the next section on social trading for what may be the best way to ﬁnd competent pros to follow. For those who do go the forex PAMM account route, keep the following in mind.
If you ﬁnd this search process intimidating or lack a trusted advisor, there’s a new alternative to traditional forex PAMM accounts with some advantages that may be better suited for some investors—forex social trading.
As we’ll discuss in the article about social trading, the list of advantages includes: