PAMM ACCOUNT INVESTMENTS EXPLAINED
The FXTM PMD invests in a PAMM:
Trader Smith has been trading forex successfully for several years. He decides it's time he should start sharing his expert trading strategies and contacts the Portfolio Management Department (PMD) at Forex Time (FXTM). The PMD reviews the trading history of the trader and if it meets the criteria of the PMD and following agreement with Trader Smith, the PMD may be entitled to utilise his trading strategy for FXTM PAMM portfolio.
The PMD places an initial deposit of $2,000 in FXTM PAMM Portfolio.
PMD FXTM PAMM Balance: $2,000 (initial deposit from PMD).
Investor Alex and Investor Chen Join
The PMD's next step is to align PMD Investors in PAMM with strategies that fit the Investor's respective profile.
Having seen the results of the different portfolios, Forex Time (FXTM) investors Alex and Chen decide to invest. Alex invests $5,000, Chen invests $3,000. The balance of the respective FXTM PAMM Portfolio is now $10,000.
After the First Month of Trading
The first month of trading is a successful one and the FXTM PAMM achieves a 30% return ($3,000) on the initial investment ($10,000). The FXTM PMD is paid the performance fee of 20% on its successful trades i.e. $600. The balance of the respective PAMM Portfolio is now $12,400.
The profits ($2,400) are distributed between the investors based on their initial deposit in the FXTM PAMM, and the PMD. With an initial investment of $5,000, Investor Alex's share of the profits will be $1,200 (50% of $2,400). With an initial investment of $3,000, Investor Chen's share of the profit will be $720 (30% of $2,400). The PMD will receive $480 (20% of $2,400) of this amount.
How the Profits are Divided
After the first month of trading, the profits earned on the FXTM PAMM are divided as follows:
- Investor Alex: $1,200
- Investor Chen: $720
- PMD: $480
The PMD and Chen Make Withdrawals
Before the beginning of the second month of trading, the PMD withdraws the profits they earned during the first month ($480). The PMD's Capital remains $2,000.
Investor Alex chooses to reinvest all of his $6,200 back into PAMM, (including the $1,200 of profit from the first month of trading).
Investor Chen withdraws $220 and reinvests the remainder in the respective FXTM PAMM portfolio. His total investment in PAMM is now $3,500.
New Portfolio Balance = $11,700 ($6,200 + 3,500 + 2,000)
Khalid Joins the Respective FXTM PAMM Portfolio
Investor Khalid hears about the success of PAMM and decides to invest $1,000 in it.
New Portfolio Balance = $12,700
After the Second Month of Trading
The second month of trading is even more successful than the first month. The FXTM PAMM achieves a 50% return ($6,350) of the new portfolio Balance ($12,700). The FXTM PMD is paid the performance fee of 20% on its successful trades i.e. $1,270. The balance of the respective PAMM Portfolio is now $17,780. ($12,700 + $5,080)
Once again, the profits, i.e. $5,080, are divided among the investors of the respective FXTM PAMM portfolio and the PMD. After the second month of trading, each investor will be entitled to a share of the profits.
At the end of the second month of trading, the $5,080 in profits will be divided as follows:
- Investor Alex: $2,480
- Investor Chen: $1,400
- Investor Khalid: $400
- PMD: $800
Respective FXTM PAMM Portfolio at the End of the Second Month of Trading
* This example is intended to serve as a visual demonstration of how FXTM PAMM works. We hope that it gives you a better understanding of how profits are earned and distributed.
Note: Past profits earned on the FXTM PAMM are not a guarantee of future profits.