29/09 10:25

How to choose a good fund manager for PAMM investment?

Foreign Exchange (Forex) market has always been a fancy market for investment due to its whopping $5.3 trillion daily business as investors may earn huge returns due to huge volume and volatility in the market. However trading in this high volatile market is very risky job as well. In order to earn consistent profits, you should have solid grip over fundamental and technical prospective of the market and this is only possible if you have economic background and sound analytical skills. If you lack financial background, then you should consider Percentage Allocation Management Module (PAMM) investing.

What is PAMM Investing?

In PAMM investing, you let a seasoned trader to manage your money on profit and loss basis. Profits and losses are automatically distributed through software.

How to Choose a Good Money Manager for PAMM Investment?

First step in PAMM investment is to select a good fund manager; there are certain things that need to be thoroughly checked before selecting a money manager:

Experience

Just like hiring an employee, you need to make sure that fund manager has adequate experience in wealth management field, for this purpose check how long is the account which is being managed by the fund manager. The account should be at least 3 – 4 years old, only then you can gauge the reliability of trading results, because consistent positive performance over a period of 3 to 4 years shows sound expertise of a trader.

Trading History

Check the results of live trades, if your PAMM broker does not offer adequate information then ask fund manager to show results on myfxbook. Do not look at big numbers and big profits, what you need to check is the drawdown, this will give you a clue about the level of risk involved; ignore fund managers whom trading history shows high drawdown. Secondly look at the consistency, a fund manager with consistent positive results is better as compared to one whose history shows big profits but he/she lacks in consistency.

Recovery Factor

Analyze recovery capabilities of a fund manager, which means how quick the trader is able to recover after suffering drawdown. Greater the recovery factor, more reliable is the fund manager.

Number of Investors

The number of investors whom accounts are being managed by the fund managers will also give you an idea how reliable a trader is. Obviously, if more investors trust a particular fund manager, then he/she must have certain skills.

Total Equity

A fund manager with large capital may take big risks and vice versa, so try to go with a trader who trade at medium sized accounts.

Remuneration for Fund Manager

It’s basically commission which a fund manager charges for his/her services; obviously a trader, who is more successful, will demand high remuneration. It is always suggested that don’t look at the size of commission, if a fund manager has proven track record and fulfills above mentioned conditions, then he/she deserves high commission.

In addition, always go through specific terms and conditions of a PAMM broker before going to invest your money.