Investments

Introduction

HOW THE PAMM-ACCOUNT WORKS

WHAT IS A PAMM ACCOUNT?

A PAMM (PERCENTAGE ALLOCATION MANAGEMENT MODULE) ACCOUNT IS A SOPHISTICATED, INNOVATIVE TOOL ALLOWING TRADERS TO SIMULTANEOUSLY MANAGE AN UNLIMITED NUMBER OF INVESTMENT ACCOUNTS THROUGH A SINGLE TRADING ACCOUNT.

The PAMM Service allows investors to find a successful trader and easily invest funds, while allowing managers to open bigger positions and increase their personal gain from profitable investments.

WHAT ARE THE BENEFITS OF THE PAMM SERVICE?

  • The profit earned in each PAMM account is automatically distributed among the investors based on their share in the investment.
  • TENKOFX provides a secure platform which removes all non-trading risks, ensuring that the funds you invest will only be used for trading. Each manager and investor assumes all trading risks for their share of the funds under management.
  • All PAMM account results are published with total transparency, so you can easily analyse the performance and statistics of each trader and decide where to invest your funds.
  • You do not need to have Forex & CFD trading skills to invest in a PAMM account. Simply select a successful trader who meets your investment profile and let them bring the profit to you.
  • Your investments are very liquid: you can join or exit the PAMM account at any time at no cost.
  • Your confidentiality is absolutely assured. PAMM account managers do not have access to investor information and all data except for the amount of your investment will remain private.
  • As a manager with a good performance record you can attract investors to increase the amount of funds under your management and earn higher profits.

ILLUSTRATION OF A PAMM ACCOUNT IN ACTION

The manager creates a PAMM account and deposits his own funds of USD 1,000. Next, he creates an Investment Offer with ‘300/20’ parameters, where:

300 $ is a minimum investment amount (manger’s terms of investment).

20 % Performance / success Fee paid to the manager from investor’s profit.

Let’s assume, there is an investor who invests 1000 USD 
The balance of account as of the first trading period is

2000 $

BEGINNING OF THE FIRST TRADING PERIOD

At the beginning of the first trading period, the manager has USD 2,000 as the account balance. Profits and losses on the account are distributed among the manager and the investor based on their initial investment, i.e. USD 1,000 each (50 / 50%).

TOTAL BALANCE: 2000$

RESULT OF THE FIRST TRADING PERIOD

Successful performance by the manager increased the initial investment by 50%, which is equal to USD 1,000. The profit is distributed among the manager and the investor based on their respective stakes in the total pool of investments, after compensating the manager for his work:

PROFIT: 1000$

The investor earns +50% on his initial investment, i.e. USD 500. He pays 20% of this profit to the manager as a performance fee.

The manager and the investor withdraw all of their profits earned, so that at the beginning of the second trading period the PAMM account balance is USD 2,000 again, and their shares remain the same 50 / 50%.

BEGINNING OF THE SECOND TRADING PERIOD

At the start of the second trading period, the balance of the PAMM account is USD 2,000, each having USD 1,000.

TOTAL BALANCE: 2000$

RESULTS OF THE SECOND TRADING PERIOD

Unsuccessful trading during the second trading period results in a 20% loss, which decreases the balance of the account by USD 400. The balance of the account is now USD 1,600, with the USD 400 loss distributed among the participants in proportion to their share in the PAMM account, i.e. USD 200 of loss to each:

BALANCE: 400 $

No performance fee is payable to the manager in the event of an unsuccessful trading period.

BEGINNING OF THE THIRD TRADING PERIOD

In the third trading period, one more investor joins the PAMM account and invests USD 2,400, which increases the total balance of the PAMM account to USD 4,000. This alters the shares of the participants. The manager and the first investor will still have equal shares, i.e. 20% each, while the new third participant, who has invested USD 2,400, will have 60%:

TOTAL BALANCE:4000$

RESULTS OF THE THIRD TRADING PERIOD

Successful trading increases the balance of the PAMM account by 50%. The profits earned are USD 2,000. This amount is distributed among the participants in proportion to their share in the PAMM account:

PROFITS: 2000$

The investors will each pay the manager 20% in performance fee. However, investor 1 suffered losses in the previous trading period, so the performance fee payable by investor 1 from his profit in the third trading period will be only USD 40, which is 20% of his net profit in the two trading periods (USD 200).
As a result, the manager receives USD 680, investor 1 receives USD 360 and investor 2 receives USD 960.

OVERALL RESULT OF THE THREE TRADING PERIODS

After the three trading periods and payment of the manager’s performance fee, the investors each receive a net profit. The manager earns profits due to his initial investment and the performance fees payable out of the profits earned by his investors.
Investor 1: initial investment $1,000, profits earned $700, less manager performance fee $140, total net profits earned $560.
Investor 2: initial investment $2,400, profits earned $1,200, less manager performance fee $240, total net profits earned $960.
Manager: initial investment $1,000, profits earned $700, plus manager performance fees received $380, total net profits earned $1,080.

INVESTOR 1:

INVESTMENT: 1,000$

700$
Total profit

Performance fee paid to manager
140$

TOTAL NET PROFIT

+560$

INVESTOR 2:

INVESTMENT: 2,400$

1200$
Total profit

Performance fee paid to manager
240$

TOTAL NET PROFIT

+960$

Manager:

INVESTMENT: 1,000$

700$
Total profit

Performance fees received from investors
380$

TOTAL NET PROFIT

+1080$

Disclaimer: The TENKOFX Company neither administers nor invests in PAMM Accounts. The role of our company is to ensure absolute compliance with the terms of investment-soliciting offers published by the managing traders. It is the responsibility of each investor to evaluate the risks of investing into a particular PAMM account, based on the information published on the website.