The percent allocation management module is a form of piggybacking a large investor’s money onto the smaller account of a trader. The trader's own money remains at risk, which theoretically reduces the chance of irresponsible management of the combined funds.
Melle: Is PAMM account open to everyone who like to invest. How can we invest to PAMM account? Is there any registration?
Just one PS: look at a following list of PAMM accounts as an example. Now look at the maximum draw-down column.
So, it is the same of the rest when it comes to investing into anything - the more you expect the bigger the chance is that the risk is excessive. Also, I am not going to show neither the average profits made there (since I know that nobody is interested in 20-25% a year earnings ) nor the ones with profits of -99.99%. It goes with the territory of any kind of investment not controlled by one own
PAMM investments are just as risky as trading forex yourself, maybe just a little bit less risky. As someone already pointed out.. higher the returns, more the drawdown will be. I did invest in a PAMM account long time ago.. managed to make 50% before the account was blown out, a good lesson learned, I trade for myself since then. If you want to, you could be conservative and go for the minimum investment amount to see how it goes and slowly building trust with the money manager, scale up your capital accordingly.
It is up to your broker , if he offers and you fulfil all requirements you can invest in PAMM accounts . Here in these accounts is a chance of good income . You can get managed money for you investment. First know the nature of PAMM and then decide it is better for you or not . I not experiences yet to trade with this type of account.
The difference is of just trading account all registration process would be same as open real account or as your broker says to fulfil terms and conditions. these accounts are managed accounts help new traders to get some managed profit and loss .
I've been investing in PAMM about 5 month and I have to say that investor's task consists in not only depositing funds, but constant analyzing fund managers performance, forecasting their future results and moving funds from bad manager to long range one to diversify risks. Now I make off living with PAMM investments, which return in average 10%/month. Here is good example of how my fellow succeed to earn in PAMMs What is better PAMM or trading yourself? | The Financial Blog & Investment Experience
It's possible to invest profitably in a PAMM, but, like anything else in Forex, doing your homework is crucial.
First, and most crucially, you must invest only in PAMMs that are located at a reputable, regulated broker which does not act as a counterparty or otherwise takes the opposite side of its client's trades. Brokers that do are subject to strong conflicts of interest which will often see them manipulating your trade environment to their advantage and your detriment. Further, not all regulators were created equal; regulators in rich, developed countries tend to offer the best protection (though no regulator is foolproof!). Australia's ASIC, the United Kingdom's FSA, Canada's IIROC and the United States' NFA are all solid regulators that you should aim to have your investment funds protected by.
Make sure that your PAMM manager's interests are aligned with yours; they should receive compensation purely or overwhelmingly via performance. Be extremely wary of managers that are compensated on the basis of volume transacted; this is a glaring red flag as it gives them a strong incentive to churn lots to your detriment, and creates a substantial conflict of interest that is likely to be ultimately harmful to your investment.
Your PAMM manager also should have a proven track record with at least two or more years of profitability unless you're willing to gamble.
Lastly, be sure to inquire about the expected monthly returns and maximum drawdown before investing. If over the course of your investment your average monthly return constantly underperforms the expected return, or the PAMM's maximum drawdown is exceeded, you should withdraw your funds at once; do not be persuaded otherwise by excuses or rationalizations, particularly not from the PAMM manager.
"Make sure that your PAMM manager's interests are aligned with yours"
That can never be true. Your interest will never be the same as PAMM manager's. Your interest is not yo lose, His interest is to have as much investors as he can get in order to avoid risk for his money