The foreign exchange market is booming because it looks like an easy market to secure daily deals packaged with high returns, big volume, and volatility. However, we need to keep in mind that nothing in the business world is easy – a lot of shady deals will promise you big profits but you will end up on the losing end. To be able to reap the best results from the Forex market, you need to be extremely knowledgeable about the market itself, its technical sides, and you must be fluent in handling financials. If you do not possess any of these qualities or are unsure of your skills, then the best option for you is to utilize PAMM investing.
Percent Allocation Management Module or PAMM is a platform for trading which enables both investors and traders to use the same broker. There are three parties involved in PAMM investing:
- the broker firm who holds the trading platform;
- the trader who manages the allocation of funds to trading products, and;
- the investor who apportions their money to the trader in hopes of earning profits.
The PAMM account traders are also known as fund managers while investors are also known as followers. The “followers” strictly follow the fund managers’ trading strategy because the latter acts on behalf of the former. PAMM investing, in simpler terms, is having an agreement between the investor and the account manager that ensures their profits or losses from the trading activity of the latter.
Now, how do PAMM accounts actually operate? It is a systematic process that allows consent and communication to flow between the trader and the account manager before they proceed to trading activities. The manager opens a PAMM account with the minimum amount of capital required and defines the investment terms. These terms are in a PAMM manager offer consisting of the minimum investment deposit, time period of investment, and premium as a percentage of profit gained, among others. To decide whether they will accept the offer, the investor will first review the trader’s trading record and analyze the terms given. Once accepted, the trader will proceed to the transactions.
If the above reasons and details are not enough to convince you why PAMM investing is a practical choice when you do not have adequate forex and financial knowledge, here are its several advantages:
1) Let the professionals do the work
PAMM investing makes it easy for investors to participate in foreign exchange trading without doing so much because the account manager in charge will be the one to handle all trading activities. It is utterly dangerous for beginners to dive into Forex investing if they do not have the knowledge and skill for it.
At CMX Direct, we assure that investors can earn passively as they can take advantage of the strategies their account managers use in trading. All the investors have to do is to relax and wait for the manager’s trading report.
2) Mitigate failure risk
In PAMM investing, you are entrusting your money to a trading manager who can expertly deal with the transactions on their own. If you are worried that you might get scammed and lose your money, know that PAMM investing utilizes a software that automatically distributes the profits and losses of a trading transaction. The trading manager cannot run away with your money because they cannot withdraw it in any way whatsoever. Moreover, aside from your money, the PAMM manager’s money is also at risk as well, which motivates them to do their best in trading. PAMM investing is truly one of the trustworthy ways to passively earn online.
3) Transaction transparency
PAMM brokers will provide you the history of a PAMM account. Brokers are your surveillance cameras that monitor and provide access to a manager’s trading record. They can help you choose the best PAMM manager to handle your funds.
At CMX Direct, we do not only provide insight on a manager’s trading information but also advanced live reports and statistics on Daily return Volatility, recovery factors, and sharpe ratio, among others. Investors need the transparency to be assured that their money will not be wasted and that they will have gains, not losses.
CMX Direct also allows investors to compare the performance of the managers through our PAMM ratings page.
4) Flexible investing
Being loyal is a good trait to have, but not necessary in the Forex investing world. Using PAMM, investors can deposit their money among multiple trading managers. CMX Direct allows investors an easy “entry” and “exit” in which investors can easily join and leave PAMM investing any time. Investors can freely put in their money on the care of several managers to maximize profit and diversify risks.
So many advantages, right? But of course, the coin always has two sides: a good and a bad one. PAMM has few disadvantages, but do not fret. This investing strategy can hurt an investor if their trading manager is careless and unwise; especially if they own the biggest portion of the fund to be traded. You need to choose the best possible manager you can come across to be hundred percent sure that you will get your money’s worth. Another disadvantage is if the broker does not allow a maximum loss limit setting, as it can result in losing everything you put in.
PAMM investing is truly a gift to those who want to passively earn online because you will only allocate your money to an expert trader’s hand and they will do all the work for you. However, it is of utter importance that you are very keen on picking the trade manager you will trust; you have to make sure they have a good track record to avoid huge drawdowns. Nevertheless, PAMM will definitely help you thrive in foreign exchange investing without stressing yourself and worrying about everything. Once you manage to choose the perfect fund manager, you can just sit back and watch the profit come to you.
Ready to grow your wealth in the Forex market? No better place to start than right here at CXM Direct! Start trading safely by opening an account here.
