Risks of PAMM accounts.
The topic of PAMM investing has recently been gaining quite a lot of popularity, the reason for this phenomenon primarily
lies in the amount of earnings.
Usually, the first positions in the rating of investment accounts are the leaders who gave their investors up to 100 percent profit in just one month.
Yes, the size is impressive, but how risky are such investments?
Will the investor have time to return his own funds? • Luck - the trading statistics of most managers are quite unstable; one month can bring 300% profit, and the next half empty the deposit.
To better guarantee the result, it is advisable to choose managers who conduct measured trading and show average but stable profits without drawdowns over a long period of time.
• Forex risk - the foreign exchange market is known not only because of high earnings, but also because of the frequent bankruptcies of traders, such is the specificity of trading. And not a single manager will be able to give you guarantees against losing your deposit.
The only protection at least will be if you choose a manager who uses the minimum leverage, but such traders earn much less than the leaders.
• Not trading risks - bankruptcy of a broker; it also happens when a company simply refuses to pay its obligations. Recently, the number of such cases has decreased significantly, but the risk still remains.
To reduce it, try to avoid investing in companies that are engaged exclusively in investing 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 diversification your investments.