How to choose a PAMM account or the basis of trust investment

Investing is an enrichment tool that has recently become available to Russian people. And therefore, it is quite natural that the state has not yet taken care that the children, along with traditional knowledge, also receive personal capital management skills. And what can we say about those who were born and raised in the USSR?

But it's never too late to learn! Moreover, this training can bring in the future so many paper and crunchy fruits that so warm the soul!

But investing is different! And if you don’t have time to sit at the charts, spending many hours analyzing, investing in PAMM accounts will suit you.

A PAMM account is such a type of investment in which investors trust their funds to a true professional who skillfully manages them, thereby making both themselves and their clients richer.

You will need

• First of all, the desire to become richer! This is where the life stories of everyone you can find on the lists of Forbes and other similar publications began.
• Then you need capital: it’s better to start small, and everyone determines the size of this “small” for himself. In my school years, I started with an amount of $ 10, which a year later, with constant reinvestment of the interest received, as well as the constant introduction of new funds, allowed me to buy my first car (albeit a Russian one, albeit a supported one).
• Now you can proceed to the direct selection of a PAMM account.

Instruction manual

1

At this step there will be the simplest recommendations. Further it will be more difficult, but these need to be taken as the canons of choosing the manager of the PAMM account.

- Trading time. I prefer to trust a trader with at least 1 year account management experience. Only if I have not heard about the manager in person.

- Drawdowns. By this term we mean the periods of the account when there is a loss of funds. If you see drawdowns up to 90%, then you should know that a trader is inclined to make a serious mistake. And even if he got out of this situation - such a case can be called a miracle, and not a pattern.

- The amount of personal capital. Personally, I do not pay attention to this. Neither the large size, nor the small size of the share of personal funds of the manager in any way indicates his professionalism. So I just keep this information in my mind.

2

Do not count on past interest rates indicated in the account history.

The amount of leverage (borrowed funds allocated by the broker to the manager for trading) depends on the number and, most important, on the volume of transactions. That is, if at the stage of its formation the account had a leverage of 1: 200, then with an increase in the amount of the account, it can drop to 1: 5. And this will have a very negative impact on profitability.

Here one of the laws of business applies: low risk - low profit. By investing in large accounts, you reduce the risk of losing your funds, but also reduce your income from them.

3

Invest in a drawdown.

Not a single trader is safe from the downturns in his efficiency. And if you observe on the chart a long-term trend of increasing account profitability - most likely, there will soon be a strong (or not so) decline.

Most invest precisely at the peak of profitability, and withdraw on a drawdown. Be smarter, invest in drawdowns, and withdraw funds at the peak of account profitability.

4

Avoid young and extremely effective PAMM accounts.

They are called "Rockets" or "Cosmonauts." These are accounts, about 3-6 months old, showing very high returns. This is not a sign of professionalism. This is a sign of a PR account company. After gaining high interest, the account falls into the top lines of the rating, thereby attracting new investors.

Be careful with such accounts. Interest is tempting, but they do not bear any guarantees.

5

And finally, the most important investment criterion for me: "Diversification".

As the old saying goes, don’t keep all your eggs in one basket. By breaking up your capital into parts, each of which you entrust to a separate manager, you insure yourself against the risk of losing everything at once.

note

The percentage of profitability of any account is indicated precisely in terms of reinvestment of funds!

Useful advice

Always focus on reinvesting your income. You are probably familiar with compound interest, right?

Let's say you put $ 1000 in the account. The yield was 10%, and you decide to safely withdraw the profit of $ 100. I suggest you do otherwise. With $ 1100 you will receive income of $ 210. At first glance, little has changed, but in a year the difference will be noticeable: $ 1200 versus $ 2138.

And even better, if to the same 1000 you add 100 every month, and then in a year you will have: $ 4276 of net profit.