The foreign exchange market, or Forex, provides people with a wonderful opportunity to make money.
To invest in Forex intelligently means to have very high income, which cannot be even compared to the profit from the average bank investments.
However, it also has its nuances, which far from many people understand. Many beginners go to this exchange market completely unready and, therefore, they lose money.
Now you are going to find out how to invest in Forex and which type of investment is considered to be the most profitable.
Investing in Forex: subcategories
Many people are not aware that it’s possible to work on Forex in different ways, depending on your personal preferences.
Each option presupposes different actions and, accordingly, different income.
In general, there are three types to invest in Forex and now we’ll describe every one of them.
Trading in Forex
This is the most widespread way, when you do the trading yourself.
You must know how to analyze the graphics, how to open positions, and how to close them, etc.
In general, you do all the actions on your own, sometimes relying on the indicators’ results or analyzing the Forex market by non-indicator methods.
Another option is to install a trading robot, which will trade in Forex instead of you.
However, the robots very seldom bring profit. Here you risk a lot to face frauds, which will take your money for the program, which is unable to bring you any profit in Forex.
Trading on your own is the most difficult way to invest in Forex, but, at the same time, the most profitable one.
You’ll have to learn how the trading strategy works, do everything according to its rules and spend your time on it, but the profit you gain is only yours.
PAMM means Percent Allocation Management Module.
This way is going to suit the businessmen, who are eager to get passive income, i.e. do not do any actions to get it.
The essence is that you give your capital to a trader or the whole trading company, the employees of which are going to trade them on the exchange market.
If a trader gains profit, you’ll get the percentage from it (not more than 50%).
However, if he loses, you face the failure too, because it’s the investor who takes all risks.
So, we may conclude that if you find a good manager for your capital, you’ll be able to have high and stable income, wasting no time on it, but only withdrawing your income from time to time.
Nevertheless, there is a risk that a trader will trade to the bad or lose all deposits.
In such situation you won’t receive anything, because the manager does not have any obligations to the investor.
Investing in Land
Copying the deals
This way of trading appeared not long ago, but it becomes popular very fast.
You can think that copying the deals is something between trading on your own and PAMM-accounts.
You work at Forex on your own, open positions on your graphic, but you don’t analyze the market and just copy the deals of successful traders.
Besides, you do not even need to be good at working on the exchange market or learn how to use various strategies, because all your positions will be precise copies of those, which were opened by the professional.
Surely, you’ll have to pay for copying the deals and the better a professional is, the more money he demands.
Unlike trust management, you pay the fixed sum every month, but not the percentage from your income.
It’s more profitable, but still you have plenty of risks.
How to invest in Forex by learning the principle of the PAMM-account work
So, the most profitable kind of Forex investments is using PAMM-accounts.
It is represented by the service, which is managed by the experienced trader who holds trading on the foreign exchange market using his own money (manager’s capital) and investors’ money.
It is something like a trading account, on which different people can put money.
The investor’s profit is formed by the manager’s speculative operations.
This manager pays dividends to everyone respectively to the sum of investment.
The more you invested the higher profit you are going to receive.
PAMM accounts work according to the following principle:
On the one hand, there is a Trader (the entrusted manager), who opens a PAMM-account. He put his money on this account and conducts the terms of cooperation (formal offer) with the investors.
The presence of his own capital helps the manager to work rationally, understanding that he risks his money as much as other investments.
On the other hand, there is an Investor (the one, who is eager to entrust his capital to somebody).
He analyses how good he is judging by his history of deals, his landing maximum, how much profit he makes and so on.
Then he makes his choice and invests in a certain PAMM-account.
- After this, the trades begin.
As you can see, the trader is interested in his profit as much as investors, because he invests money on a par with everyone.
How Can I Make Money without a Job?
Perhaps, you’ll ask a quite reasonable question of why a trader needs it, because he has to take more responsibility and work with big sums of money, which even don’t belong to him.
Who even wants other people get richer at his expense?
The answer is really simple – every investor, who invested in a PAMM-account, must pay the reward to the manager, which is the percentage from how much profit was gained.
More often than not, it is not more than 20-30% and it is paid only in case of a successful deal.
An investor does not pay 100% out of his pocket.
As a result, the managing trader had double interest.
Firstly, his capital also takes part in trading, and secondly, the more profit he brings to the investors, the more income he receives as a reward.
So, you should not worry about it.
Speaking about investors’ profit, we think it’s quite obvious.
Those, who decide to invest in PAMM-accounts, claim on the profit, which can be compared to trading on their own, with the only difference that it is completely passive.
The ways how to assess the managing PAMM-account and invest in Forex
By the trading experience
Investors are advised to choose long-term accounts, which are more than 1 year old.
The beginners’ accounts may reflect only successful deals, which were received simply by their good luck.
The highest percentage is not the criteria you should focus on.
By the success of the business
There is always a possibility to compare how many successful deals and failures there were, and the correspondence of the income and losses.
By their professionalism
It is made out of two things: how old a PAMM account is and how small is the number of the failed deals.
You should also pay attention to the numerical ratings:
- The average yearly income is about 40% in any period of time within 1 year (from January to January, from August to August).
The failed deals must not exceed 25%.
This rating can be considered as using conservative strategies (the lower percentage of income, but the least number of the failures), responsibility towards investors, and unwillingness to risk investors’ money in vain.
Rather big manager’s personal capital and its correlation with the whole PAMM-account.
If the whole account is huge, but the manager’s investment is not, it should alert every investor.
What is the least sum to invest?
A good trader won’t work with miserable $10 accounts.
The advantages of investing in PAMM-account
Investing money in Forex in general and particularly investing in PAMM-accounts has the number of advantages, the main of them are the following ones:
An investor claims on the income that successful traders have.
Even an average PAMM-account brings much more than, for instance, a bank deposit or investing in security papers.
The low market entry threshold
The minimal sum to invest in a PAMM account is about $10-50 (each trader sets his own sum), which is much lower than, for example, working with stock market.
In order to buy a decent holding of shares, which can bring you income regularly, you’ll have to spend more than a thousand or even two thousand dollars.
Needless to mention such kinds of investments as real estate, valuable metals, antiques and so on.
The speed of receiving income
A good manager trades non-stop, opening positions almost every day, which significantly speeds up the process of getting income.
How bookies make money?
The flexibility of capital management
It’s more difficult to withdraw profit from a PAMM account that to invest in it.
You file the application, indicate the sum and get your money back.
This is a very powerful psychological factor, i.e. you might withdraw the initial capital as soon as you get the first income and start working on the pure income.
The guarantees that the manager works clearly and pays his clients in time improve broker’s reputation, who would not risk it because of a manager.
Wide range of assets
PAMM accounts have become a rather popular service nowadays and you won’t have to suffer from lack of choice.
Almost all big brokers have their rating of PAMM accounts with tens of positions.
Investing in Forex can bring you rather high profit, if you don’t invest in very young PAMM accounts and estimate all risks.
It’s quite real opportunity to make passive money, which has greatly developed for the past couple of years.
Nevertheless, you should find beforehand the answers to all your questions and look up the information on how to invest in Forex, lest you lost your money.