The history of trust management started when the knights needed to join the Crusades. Because of that, they were leaving their homes with all of their properties on trusted relatives or guardians to administrate and benefit their families. That times are centuries behind, but people are still interested in the idea of trust management. There is no surprise why. Isn’t it great to deposit your capital into account and leave all the work to the professionals? Sure, it is, but before trusting your money to others, you should decide what kind of accounts you want to invest. To make the decision wisely, read the outline of the most common ways of getting a profit through investment.
PAMM is a trust management system in which the funds of investors are connected to a specific offer, and they are concentrated on the account controlled by a trader (account manager). An account manager can rule investors’ money as they like. However, profit or loss distribution is proportional to the share of each participant according to the size of their investment.
PAMM-accounts were very popular between 2008 and 2014, and as well as Crusades, they would be better left in the past. Why? Honestly, this is one of the riskiest schemes in investing. Even if you’ve already understood that the trader is about to lose capital, you cannot withdraw your money and save your income. Many investors that entered the Forex world with PAMM-accounts leave it very fast.
LAMM-accounts are commonly known as social trading or copy trading. It is one of the safest ways to invest your money and get a profit. Here you don’t have to transfer your capital to someone else’s account, and you can withdraw your money whenever you want. Also, it is easy to start. You just need to choose and download an app you prefer more, verify your ID, and you are in! You can choose from many apps. The most popular and trustworthy ones now are eToro, FBS CopyTrade, or OctaFX CTrader. You can study the terms of usage and decide. The main advantage of copy trading is here you can protect yourself from a crucial failure. When you start copying an account manager, you can just set ‘stop loss’ and ‘take profit’ parameters, which prevents you from losing everything.
MAM-accounts are quite similar to LAMM-accounts, but they have one essential difference. Here investor is meant to be fully involved in the trading process. The transactions are doubling the investor’s account. So, being a co-creator of the trading allows you to learn from more skilled traders. You can also open and increase the capital of the transaction, but you have to share risks as well. It sounds like an effective way of investing, right? Yes. That’s why this type of accounts hasn’t become popular. Most investors just want to leave the responsibility on the trader and chill. If you feel the same, MAM is not your cup of tea.
RAMM-accounts became popular recently. They are positioned as a compilation of PAMM and LAMM but the least risky. Indeed, it gives the opportunity to reject an offer anytime you want, to use the investor’s account for trading, to enter the same offer twice or forced closing of all deals on Friday to protect against a gap. All of this might seem risk-free, but still, it can’t guarantee total protection from loss. Many investors, followed by the bright picture of RAMM-accounts representation, become too risky and lose a lot.
If you are a prudent one and can take your emotions under control, it might be great to start here.
All in all, LAMM- and RAMM-accounts can offer you a profit with low-risk investments, but it is up to you to decide where to begin!