Risks of PAMM accounts.
PAMM investing has recently gained considerable popularity, primarily due
to the size of the profits.
Typically, the top investment account rankings are occupied by those who have returned up to 100% to their investors in just one month.
While the profits are impressive, how risky are such investments? Will investors ever be able to recover their own funds?
• Luck – the trading statistics of most managers are quite unstable; one month can yield a 300% profit, while the next, the deposit can be half-empty.
For a greater guarantee of results, it is advisable to choose managers who trade steadily and show average but stable profits without drawdowns over a long period of time.
• Forex risk The currency market is known not only for its large profits but also for the frequent bankruptcies of traders—that's the nature of trading. And no manager can guarantee you won't lose your deposit.
The only way to have any protection is to choose a manager who uses the minimum leverage, but such traders earn much less than the leaders.
• Non-trading risks - Broker bankruptcy. It also happens when a company simply refuses to pay its obligations. The incidence of such cases has decreased significantly recently, but the risk remains.
To reduce it, try to avoid investing in companies that deal exclusively with investments and do not provide dealing services.
In order to reduce the above-mentioned risks, you should work only with trusted brokers and do not invest in one manager, create PAMM portfolios, thereby conducting diversification your investments.
