Any business involves certain risks. A foreign exchange market risks are great enough, especially if you invest heavily in one PAMM.
To minimize the risk the best way to invest is not in one of the PAMM-account, and in some, creating the so-called portfolio PAMM accounts. Today a significant number of brokers will ask you to collect, or provide a ready-made portfolio of PAMM accounts.
Index PAMM accounts. What is it?
We propose a unique investment tool, developed by the company of Forex Trend . It is called INDEX PAMM accounts. The essence of this tool is that it is a measure of profitability of several PAMM accounts quoted as a single unit. This figure is the average yield of selected PAMM accounts for a certain period of time (trading period).
How the PAMM accounts index works?
In order to understand how the index refer to the numbers. Consider an index that form five PAMM accounts:
1st PAMM account: 30%
2nd PAMM account: 20%
3rd PAMM account: 20%
4th PAMM account: 20%
5th PAMM account: 10%
It indicates the percentage of the share, which takes account of the Index. It is in this percentage and the investment will be divided into these PAMM buying index. When you purchase one item, the price of which is $ 1,000, the funds are distributed accordingly:
1st PAMM account will (30% of $ 1,000) = $ 300
2nd PAMM account will receive $ 200
3rd PAMM account will receive $ 200
4th PAMM account will receive $ 200
5th PAMM account will receive $ 100
Thus, buying an index valued at $ 1,000, we have proportionally weighted portfolio, which includes five different PAMM accounts.
How does the value of the index PAMM accounts?
To understand how changing price index from the date of investment, consider the following example:
At the end of the trading period investors achieved the following results:
1st PAMM account: $ 300 + 60% = $ 480
2nd PAMM account: $ 200 + 15% = $ 230
3rd PAMM account: $ 200 - 40% = $ 120
4th PAMM account: $ 200 + 20% = $ 240
5 - First PAMM account: $ 100 - 50% = $ 50
In total we have 1120 $. To calculate the return on the index in percentage, multiply its share in the index percentage returns for the period under review. We get:
1st PAMM account 30% * 60% = 18%
2nd PAMM account 20% * 15% = 3%
third PAMM account 20% * - 40% = 8%
4th 20% PAMM account * 20% = 4%
5th PAMM account 10% * 50% = -5%
In the example for the trading period the index rose by 12 points. Here, clearly visible in the figures, as not investing their entire capital in one account, helped in reducing risk and also losing the investment amount.
How are the indexes PAMM accounts?
Index is formed by specialists of forex trend for the criteria specified in the description of a particular index.
As of criteria for the index is taken:
- The period of trade (at least a specified period)
- the amount of capital control (not less than a certain amount)
- the degree of aggressiveness of trader achieved and the performance results.
Indexes can be purchased through the terminal MetaTrader. Depending on the outcome of trade included in a particular index PAMM quotes index going up or down. The second option is available only if the cumulative effect of trade on the PAMM-account in the index is negative.
In the first phase it will be available to the following indices:
1.Premium conservative.
This includes accounts that meet the following conditions:
- The term trading on the PAMM-account - at least 12 months.
- The amount of equity manager - not less than 50 thousand dollars
- Maximum drawdown - no more than 40%
- Accounts and percentage that form the index: 7165 - 40%, 7031 and 5995- 30%
2.Premium Stable
Includes accounts that meet the following conditions:
- The term of trade - at least 6 months
- Manager's Capital - not less than 30 thousand
- Maximum drawdown - no more than 50%
- Accounts and percentage that form the index: 6482 - 40% 7187 30%, 7093- 30%
3.Indeks PAMM2. Stop-Loss 50%.
Includes accounts that meet the following conditions:
- Proposal provides for a distribution of losses 50:50
- Capital Manager - not less than 30 thousand dollars.
- Duration of trade - at least 3 months.
- Accounts and percentage that form the index: 9035 - 50%, 9185- 50%.
Advantages of using indexes PAMM-accounts:
1. reduce risk. Lump of losses in the accounts of several successful traders is highly unlikely.
2. Manageability. to simultaneously invest in some PAMM Accounts enough to fund your account and get the index in the terminal. To easily withdraw funds.
