I do not how to trade. I have no time to trade. I can never make reasonable consistent profit. Well, these are the questions most Forex Beginners often ask themselves before investing money in the Forex Market. It is no wonder, how hard it is to learn, trade and generate profit in this market. I could speak for myself and have no shame in accepting the fact that I have blown three accounts when I was starting out my Forex journey.

QUICK FACT

80 percent of Forex traders lose money so think before you invest and start trading blindly.

Most professionals and institutional traders are right 50 percent of the time. However, they mostly depend on the size of the bet instead of direction. So, unless you are a millionaire chances of you making profit is quite slim.

Most banks scale the size of their trades by assessing risk and reward ratio. They usually go long term and make profit on it.

Don't believe me? You still have doubts? Check the Trader contest and name me me one Trader who has finished top 5 or let's make the window a little bigger top 20 on a consistent basis.

Even Professionals make losses at one point of time and It's bound to happen. People with zero knowledge usually get confused and wonder what should they do with the money they have won or savings they have accumulated over a period of time. Well, here is your solution. Invest In PAMM Account or what we all say Profit Allocation Money Management Account.


What is PAMM ?

PAMM is just like depositing money in the bank. Here, investors or basically you who has no knowledge of Forex or no time to trade Forex allocates money to the qualified trader or manager and ask him or her to trade with it. These professional traders usually manage more than one account with an aim to generate profit.


How PAMM Works ?


Let's say you decide to give money to the qualified trader of your choice. All you have to do is select the preferred PAMM account or the account managed by the trader of your choice and deposit money in it. Lot of people wonder is it safe? is it scam? is my money safe? Well, absolutely all these PAMM accounts are managed by reputed brokers so you don't need to worry about it.

Check the picture on right. There are four investors who decided to invest money and one money manager/qualified trader who is managing their money. Usually money manager also maintains his/her own account as well.


PAMM Setup

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Let's say Mr. Gold decides to be a Money Manager or PAMM account holder. What he needs to do? He will contact a reputed broker that deals with PAMM accounts and sign the agreement. This is pretty much same like opening a new Forex account. There is no difference. The only difference that you will find is that the broker provides a referral link through which the money manager can attract new investors, clients, new traders who will invest money in his account. After setup, his profile would be posted on site to show his trading skills and history in order to attract investors.

Check the picture on left. You will find the list of top PAMM managers or qualified traders with trading style, experience, profit percentage, risk percentage and number of investors.

In this case, I would explain the first one Mr. Gold as shown in the picture. Mr. Gold has been trading for 3.5 years with 49 percent return on investment. So, if you invest 100 USD you will get 149 USD back. Max draw down is only 25 percent so on his worst day he wouldn't lose more than 25 USD of your invested funds. He is managing an account balance of close to 196 k with a total of 515 investors. That is actually quite impressive over a period of 3 years.









Investors


After checking out the statistics, you decide to invest funds. Let's say Mr. A, Mr. B and Mr. C decides to invest funds. What they need to do?

They will contact the broker and apply for a managed account with Mr. Gold. Let's say Mr. A invests 4000 USD. Mr. B invests 3000 USD and Mr. C decides to invest 3000 USD.

Let's assume Mr. Gold charges 30 percent performance fee on profit. This is the fee you pay from the profit that Mr. Gold earns by trading your money. The picture on right shows how PAMM account would actually look before trading.

Mr. Gold starts trading with an initial investment of 10,000 balance and on the very first month he manages to earn 2,000 USD profit.

This profit is distributed to all investors as per their share in the PAMM account.

Mr. A holds 40 percent of the PAMM account whereas Mr. B and Mr. C holds 30 percent respectively.



Allocation of Profit


Mr. A's share of profit = 40 percent of Total Profit = 40% of 2000 = 800 USD out of which 30 percent goes to Mr. Gold (trading fee) So, Mr. A's actual gain is 800 - (30% of 800) = 800 - 240 = 360 USD

Mr. B's share of profit = 30 percent of Total Profit = 30% of 2000 = 600 USD out of which 30 percent goes to Mr. Gold (trading fee)
Mr. B's actual gain is 600 - (30% of 600) = 600 - 180 = 420 USD

Mr. C's actual gain is same as Mr. B as both share same percentage in the PAMM account. .







The PAMM account has now a balance of 11, 400 USD and will now look like this after one month of trading.

Mr. A's account balance is 4560 USD

Mr. B's account balance is 3420 USD

Mr. C's account balance is 3420 USD.


Conclusion

You can actually see with little or no knowledge Mr A, Mr, B and Mr. C has made profit after one month simply by investing money in Mr. Gold's managed account. Does that sound amazing?
This works great for new traders or for those who has no time to follow the market 24 hours. That's how PAMM system works. More consistent profit Mr. Gold generates every month more investors sign up for his PAMM managed account. I hope this basic illustration helps and if I have missed any point feel free to share it.
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