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.
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
Now suppose that two investors (A and B) want to invest in the PAMM account of this manager and one of them deposit $50000 and the other $30000 respectively. With these deposits, the PAMM account has a total capital of $100000.
2. Alpari PAMM account balance at the beginning of the trading period.
At the end of the first three months period, the results of the work of the manager are distributed as detailed above. If the gains made by the PAMM account had been $ 50 000, or what is the same 50% compared with the initial capital deposit ($ 100,000) at the end of three months the total balance would be $150 000.
Then the investor A that have invested $50000 would have a gain of $25000 that correspond to 50% of profits generated by the management of funds made by the account manager. The manager in turn receives a payment of $5000 which represents 20% of the income earned by the investor A. In the case of, investor B, who invested $30000, he receives a profit of $15000 which represents 50% of profits over the invested capital that got the manager who takes 20% of these earnings as payment, which is equivalent to $3000.
3. Balance of the PAMM Account after the first trading period.
Thus, the results of the PAMM account management during the first three month interval gave a total gain of $50000 which were distributed as follows:
- 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.
Now, for the second interval of 3 months, suppose that the manager proceeded to withdraw $18,000 of his profits while the investor A reinvested both their profits and their initial capital which makes a total capital account of $70000. In the case of Investor B, he withdraw $2000 of their earnings and reinvested the rest thus he has a total of $40000 in their account.
4. Reinvestments and withdrawals.
Besides this, a third investor C just invested a total of $ 10 000 in the PAMM Account.
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.
In this example, we have described in general how the PAMM accounts of the broker Alpari work so that both investors and expert traders can analyze the profit opportunities by investing or managing funds. With respect to Alpari, any client can open a managed PAMM account investing at least $200. There is no limit or maximum amount to invest in an account of this type.
PAMM Acounts offered by Alpari
Currently, Alpari offers 3 different types of PAMM accounts which have different characteristics that are detailed below:
-PAMM.Standard.mt4 accounts: This is the classic PAMM managed account of Alpari, which offers similar trading conditions to those provided by the regular trading accounts of this company (Standard.mt4 account). To open an account of this type, the client requires a minimum deposit of 300 USD or 200 EUR. It allows to trade with a minimum transaction size of 0.01 lots and uses the Metatrader 4 platform for account managers. No commissions are charged to customers to open/close market positions, the broker only charges the spread on the price of the instrument with which the account manager trades. The account manager is able to trade with 50 currency pairs, metals in the spot market market and Contracts For Difference based on shares, ETFs, commodities, futures, stock indices and other. It offers a variable leverage from 1:1 to 1:500.
-PAMM.ECN.mt4 accounts: This type of PAMM account allows Alpari customers to obtain the benefits of investing in a managed account that operates under ECN conditions. Among these benefits we can mention the access to the largest liquidity providers in the market, which offers better trading conditions, such as lower spreads and better prices. The PAMM.ECN.mt4 account requires a minimum deposit of 300 USD or 200 EUR and allows to trade with a minimum transaction size of 0.01 lots. It also uses the Metatrader 4 platform for account managers and provides a maximum leverage of 1:500. These PAMM accounts do not charge commisions on transactions in the markets. The account manager has the possibility to trade with 51 currency pairs in the Forex market and precious metals.
-Pro.PAMM.ECN.mt4 accounts: This is a type of PAMM managed account that operates under ECN (Electronic Communication Networks) conditions, which provides important benefits for both, the account manager and the investor, such as greater market depth, a condition that allows to obtain competitive rates and very low spreads, and a highly efficient execution. This ECN account requires a minimum deposit of 5000 USD or EUR, it offers a maximum leverage of 1:500 and allows a minimum transaction size of 0.01 lots. It charges a trading fee of 16 USD for each traded lot. In this case the account manager has the possibility to trade with 50 currency pairs in the Forex market and precious metals.
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: