Fraud on PAMM accounts

Until recently, investing in PAMM accounts of managing traders was perceived as a highly risky type of investment. All investors were well aware that their account could be managed by an amateur and the slightest deviation from the manager’s trading strategy could lead to a complete loss of funds.

However, despite all the riskiness of this investment method, in each brokerage company there were both nuggets who skillfully managed money, and investors who were ready to take desperate risks and provide funds to the trader.

Investors never had any questions about PAMM accounts, since this system of interaction between trader and investor suited both parties, since the broker himself and his PAMM system acted as a guarantor of the integrity of money (there is no way to withdraw the investor’s money).

All kinds of restrictions on drawdowns and losses allowed the investor to exit the system with minimal risks, and for the trader who dreams of big investor money, the PAMM system, thanks to its publicity, made it possible to attract constant inflows of investment.

In general, the PAMM system itself is an excellent and unique tool for interaction between an investor and a trader, however, a lot of scammers have appeared around this type of system. Previously, no one could even think that some kind of tricks could be built around PAMM accounts.

Loud bankruptcies of companies.

However, the first shocking news about the closure of the MMSIS forex broker and an investigation by regulatory authorities showed that it was the PAMM system that became the shell behind which an ordinary pyramid or HYIP .

Initially, the company conducted ordinary activities, where everything was clean and PAMM account managers changed dynamically in their rating positions from day to day. However, one fine day, a top 20 trader appears, who constantly brought profit to investors, did not make any mistakes and none of them lost money.

Agree, it’s mystical that 20 traders boldly hold on to their positions and none of them make any mistakes, even in the most difficult parts of the market, when Greece alone, with its statements, did whatever they wanted with the euro exchange rate.

But the company didn’t stop there, and even created its own top 20 index, which it offered investors to make money on. As a result, one fine day the company collected millions of investor money and simply disappeared.  

The above described case was only the first bell, telling us that in whose hands the PAMM computer is located, he can twist it as he wants.

The second bell rang for investors when one of the most popular PAMM platforms, broker Forex Trend and its subsidiary Paneton Finance, went bankrupt. In this case, brokerage scammers went to a new level by offering the investor PAMM 2.0, thanks to which the investor and trader share risks equally as well as profits.

Agree, not a single trader is ready to take on such risks, and if he can compensate for the loss of a manager, then, in fact, why take the money?

But for some reason, investors did not want to look at the whole picture of what was happening with a sober look, and at the same time the company created a fictitious stable backbone that supposedly brings in money. As you understand, in the end the two brokerage companies turned out to be an ordinary pyramid, and the investors’ funds disappeared.

Such blows to the reputation of the PAMM system as a whole make one wonder whether it is worth getting involved with this kind of investment at all. However, you shouldn’t lump everyone with the same brush, because there are companies that do everything transparently.

How is it going with real brokers?

For example, in Alpari and InstaForex the rating of managers is so dynamic that it is very difficult to see the same trader in his position over the course of one month.

And the number of PAMM accounts destroyed by traders is sometimes simply surprising.
However, this is a reality and must be accepted, because traders more often lose than they earn. How to avoid scammers?

All of you have probably encountered intrusive calls from brokerage companies that are guaranteed to promise you a certain percentage of profit if you invest in such and such traders. If you are guaranteed something, this is already an excellent reason to bypass the company, since no one gives guarantees in investing, even the largest hedge funds.

It is also necessary to understand that stable traders can be counted on the fingers of one hand, so investing should be short-term in nature and last no more than 1-3 months per trader. Even if you are in bad hands, leaving the company in a timely manner will not only save your money, but also withdraw what you have already earned.