What is the meaning of PAMM Trading? and how does it actually work in trading and waht's the benefits of its and also negative sides of its. I actually want to know about this in detail. It would be very helpful to me in taking any decision about PAMM trading.
PAMM System lets you register either as an Investor or as a managing trader. You may check the full details here PAMM System Please do visit all sections to fully understand how each PAMM - Account works.
PAMM stands for percent allocation management module or percent allocation money management. It is the process of attaching client's money to a specific trader managing one or more accounts appointed on the basis of a limited power of attorney. Depending on the size of the deposit each managed account has its own ratio in PAMM. Trader's activity results (trades, profit and loss) are allocated between managed accounts according to the ratio.
Because currency trading and other forms of arbitrage achieve profitability within very narrow margins, typically, a PAMM system allows more money to be brought into play while distributing the risk of one trader across (usually) multiple investors.
Lets assume that there are 3 managed accounts under trader's management:
1. USD account with deposit of $ 100,000 and ratio 9.3%
2. EUR account with deposit of ? 400,000 and ratio 49.5%
3. GBP account with deposit of £ 300,000 and ratio 41.2%
Depending on funded amounts different ratios are applied for managed account (for ratio calculation all amounts are converted in USD equivalent based on market rate). In case if, for example, Trader/Money Manager decides to BUY 10 mio EURUSD, PAMM allocates the order between managed accounts according to its ratio. Each managed account has its own part of position and corresponding Profit & Loss. In current example the first managed account will get position LONG 930,000 EUR/USD, the second - LONG 4,950,000 EUR/USD and the third - LONG 4,120,000 EUR/USD. Resulting profit & loss will be automatically calculated for each account depending on market prices.
PAMM account is the one wherein one chooses a particular option eg Pamm Trader or pamm partner ... in simple sense its nothing but just some trades instead of you and collects some commission in profits
A percent allocation management module, or PAMM, which may also be referred to as percent allocation money management, describes a software application used predominantly by foreign exchange market (forex) brokers to allow their clients to attach money to a specific trader managing one or more accounts appointed on the basis of a limited power of attorney.
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