What are PAMM Accounts?
A PAMM Account is usually a series of trading managed accounts, which are unified to form an independent unified trading structure, where trades are carried out only by the money manager of the PAMM Account. The series of managed accounts that comprise the consolidated PAMM Account are handled by the trading platform as a single account.
The principle by which PAMM accounts work is the proportional distribution of gains and losses among the various investors whose accounts form the PAMM account. PAMM account provides benefits to all participants, as an investor can potentially obtain high profits without having to make a single trade by itself and the account manager receives a percentage of the profits and the possibility to access large amounts of capital.
More information about Alpari and its Forex brokerage service in this review: Review of Alpari Forex broker
PAMM accounts with Alpari
The Forex broker Alpari, one of the most important in the sector, has paid attention to the opinions and desires of their customers, and for that reason has developed a PAMM account service through which investors can safely place their funds in accounts managed by experienced traders (money managers), so they can get steady profits in the Forex market without having to handle the opening of market trades and the management of these positions. The PAMM accounts service of Alpari has gained popularity among professional managers and private investors who wish to harness the enormous potential of Forex for profit. This is because it is a reliable and profitable investment at the same time.
In this case, Alpari offers PAMM accounts with regular trading conditions and PAMM accounts with real ECN trading conditions, through which the manager can trade with direct access to the leading providers of market liquidity. The manager can open a PAMM account and begin to attract investors with a minimum capital of $300 USD (the minimum investment for investors is $300 USD too).
Alpari PAMM accounts have become a reliable and cost effective way of investment which has years of operating. It is one of the investment options of this broker, along with investment funds and structured products.
How works Alpari PAMM?
Basically the principle under which the Alpari PAMM accounts operate is simple. As mentioned before, the investors who want to invest in the Forex market open a PAMM account with the broker and select the account manager that will manage their funds. In this way the manager is responsible for opening and closing positions with the investor`s money and month after month the money obtained through market trades is distributed among investors, the manager and Alpari according to fixed percentages. To understand how function the PAMM accounts of Alpari, we present a clear example focused on investment and capital management:
Management and investment
Imagine that a successful trader in the Forex market with years of experience as a trader opens a PAMM account in Alpari as an account manager. Now suppose the manager’s initial capital is $20000 and that manages to convince a number of investors to open a managed account with Alpari and transfer their funds to his managed PAMM account. In this case, for each quarter (time interval after which investors can withdraw the earnings obtained in the PAMM account), the manager offers the investors to distribute the gains between them and collect 20% of the profits earned by their services
1. Alpari PAMM account opened with $20000
2. Alpari PAMM account balance at the beginning of the trading period.
3. Balance of the PAMM Account after the first trading period.
- Investor A: Total income of $20000.
- Investor B: Total income of $12000.
- Account Manager: Total Income of $18000 (equal to the gain obtained with initial capital of $20000 plus the profit made as a manager of $ 8000). As the manager initial investment is $20000, the benefits obtained with this capital must be added to the $8000 which he obtained managing the funds of investors. In this case, the $20000 capital produced a gain of $10000 corresponding to 50% yield obtained by the manager.
4. Reinvestments and withdrawals
5. PAMM Account balance at the beginning of the second trading period
Now, with a total capital of $140000, suppose that the manager has achieved during the second period, a gain of 100% in the PAMM account, which is equivalent to an amount of $140 000 . With these earnings the total balance of the account is now $280000. Because of this, Investor A receives a profit of $70,000 (100% of invested capital of $70000) and pay the manager 20% of these gains that is equivalent to $14000.
In the case of investor B, he obtain a gain of $40000 (100% of invested capital of $40000) and pays to the manager a benefit of 20% of these gains that is equivalent to $8000. Finally, the investor C got a profit of $10000 (100% of invested capital of $10000) and pays the manager a total of $ 2000, representing payment of 20% of the profits made through the work of the manager.
6. PAMM account balance at the end of the second period of trading
At the end of the second period, the work of the PAMM account manager produced as a result a gain of $140000 distributed as follows:
- Investor A: Total income of $56000.
- Investor B: Total income of $32000.
- Investor C: Total income of $8000.
- Account Manager: Total Income of $44000 (equal to the gain obtained with initial capital of $20000 plus the profit made as a manager of $24000). As the manager initial investment is $20000, the benefits obtained with this capital must be added to the $24000 which he obtained managing the funds of investors. In this case, the $20000 capital produced a gain of $20000 corresponding to 100% yield obtained by the manager.
PAMM Accounts offered by Alpari
Currently, Alpari offers 3 different types of PAMM accounts which have different characteristics that are detailed below:
If you want to open a PAMM account with the broker Alpari (or just want some information), either as an investor or as an account manager you can use the following link or banner: