(Profit Allocation Money Management)
Besides this, PAMM module of MasterECN can access user-friendly interface in the limits of our proprietary Secure Client Area which offers extended improved visibility and flexibility.
As an example, let’s say three investors John, Peter and Matthew are interested in earning profits from Forex trading. For simplicity of example, let’s assume that all three investors chose Phil to manage their respective investments for forex trading who charges 10% of the profit. Here is the share from each investor and the manager’s own trading capital in the total pool:
John = $4,000 | Peter = $2,500 | Matthew = $6,000 | Phil = $3,500
Total = $16,000
In terms of percentage contribution to the total pooled PAMM fund of $ 15,000, each investor has the following share:
John = $4,000 / $16,000 = 25% and similarly,
Peter = 15.62%
Matthew = 37.5%%
Phil = 21.87%
Suppose after one trading period phil manages to make a 30% profit on his pool, which now totals at $20,800 ($1,000 + 30% profit or $4,800).
Phil takes away his 10% charge on profit or $450. The remaining profit of $4,050 is distributed to all investors based on what percent they each have in the total pool:
John = $4,050 * 26.67% = $1,080
Peter =$4,050 * 23.33% = $945
Matthew = $4,050 * 16.67% = $675
Phil = $4,050 * 33.33% = $1,350
Total = $20,800
This is just a simple example of how the PAMM system works.
PAMM accounts are of two types: the PAMM investor account and the PAMM trader account. The PAMM investor account is used for transferring funds to the PAMM trader account. The PAMM trader account is used for accepting funds from the PAMM trader account. Every Master ECN client gets the opportunity to register an unlimited number of PAMM accounts.