Investing in Forex continues to be popular, especially among beginners and those who don’t have time to trade. ForexStart broker offers 2 investment options: direct (based on the PAMM principle) and copying transactions.
The principle of the PAMM account has long been known to traders. The broker’s website has a rating of managing traders, for each of them there are statistics with trade indicators and information about the commission that the manager takes for his work. The investor chooses a manager and invests in his account. According to the information on the website https://traders-union.ru/brokers/forex/view/forexstart/, the minimum threshold is $ 100.
How does PAMM direct investment work?
A managing trader’s account contains funds of both himself and all his investors. The result of trading applies to all PAMM account participants in proportion to the amounts invested. If the manager earned 50% of the profit in a month, and your investment is $ 1000, then your share will be $ 500. But don’t forget about the commission! If, for example, a trader takes 30% of the commission, then you must give 30% of the $ 500 earned, that is, $ 150. Too much? But you did not strain at all and did not participate in the trading process at all.
Autocopying trade deals
This is exactly the case when plagiarism is not condemned, but encouraged: you will copy the trades of an experienced trader to your account to make money without any effort. A trader trades, and his trades are duplicated to your account so that you can earn with him. It would seem that this is very similar to a PAMM account: there are also investors and traders, and the investor receives passive income by investing in the work of a trader. However, this method of earning has fundamental differences from the PAMM system.
- You are not depositing your funds into a trader’s account. The money remains in your account, and the copied transactions will be automatically traded on it.
- You yourself determine the risk management, since you can set the parameters for reopening trades at your discretion. For example, a 2: 1 ratio means that transactions in your account will be copied for an amount 2 times less than the trader himself does. You can also increase the volume of transactions, since the broker offers options from 1:10 to 10: 1.
- You can close the copied deals yourself. For example, you see that the trade is at a loss, and you can close the position manually.
As for the commission, it is the same as in the PAMM account
Both methods are beneficial in their own way. Direct investment allows you not to engage in trading processes at all, but it is also more risky. Copying trades offers more opportunities for money management, but also requires the investor to participate in a certain amount of trading.