Today, PAMM accounts are extremely popular, with many Forex brokers offering this service. For trading beginners, the opportunity to invest in skilled speculators who generate profits is especially appealing, allowing them to participate in the market without actively trading themselves.
However, this raises an important question for many new investors: how do you choose a PAMM account that guarantees the safety of your funds and a stable, positive return on your investments? Unfortunately, some knowledge is essential. To select a successful manager capable of growing your investments, Forex investors need to understand market processes and, ideally, have some personal trading experience. Learning how to invest wisely in PAMM accounts is a science in itself, and at the very least, beginners should learn how to read the monitoring data of trust management accounts.
Let’s take a closer look at how to properly interpret the ratings of trust managers to select a reliable PAMM account.
Contents
- Age of the Trust Account and Initial Capital
- Deposit Load (Margin Level)
- Manager Contact Information and Risk Diversification
Age of the Trust Account and Initial Capital
In our opinion, this is the primary indicator to pay attention to. There are many ways investors can be deceived by exploiting their lack of experience.
For example, a PAMM manager may open several accounts with minimal starting capital and place opposite orders with the maximum allowed lot size on each. As a result, one of these accounts will almost certainly show excellent statistics, with returns ranging from 500% to 1000%.
Later, the manager’s trading will become less risky (if they actually intend to earn from managing other people’s funds), and the returns will be much lower than what you see on the monitoring page.
To protect yourself from such schemes, always check the starting capital and the age of the PAMM account: if the manager has shown positive results over a year and the initial deposit was substantial, then this account is likely to be professional.
Deposit Load (Margin Level)
This is the most important indicator of a manager’s trading risk. You’ve probably noticed that when opening a trade, your margin level is displayed as a percentage. The less capital you use for a single trade, the higher this indicator.
High returns with minimal risk indicate that the manager has a trading system that can generate profits much higher than the stop loss level, even with minimal risk. This means that any series of losses (which are inevitable in trading) can be covered by just one or two profitable trades. This is an excellent sign of a solid investment strategy.
Manager Contact Information and Risk Diversification
You should understand that brokers allow managers to provide minimal information to investors. If a manager chooses to share very little about themselves, it usually means they lack confidence in their own effectiveness.
It’s much easier to trade with other people’s money without any obligations to investors. However, if a PAMM manager has been using their trading method successfully for a long time and plans to develop their project, they will be interested in promoting it and actively communicating with both current and potential investors. If the goal is simply to make a quick profit by randomly buying or selling currency, there’s no reason to leave a trace.
It’s also important to remember that the human factor is always present in trading, and even a PAMM account that has proven its effectiveness over several years can lose money due to a series of mistakes by the manager. Therefore, it’s essential to always diversify your investment portfolio or spread your risks. Never rely on a single manager; try to find several effective managers and evenly distribute your investments among them. This approach will help ensure the safety of your funds and a good return on your Forex investments, provided you follow the points outlined above.
