HotForex PAMM Account – Is it Worth It?
HotForex PAMM Account – Is it Worth It?
A PAMM account is one of the types of managed trading accounts in the Forex market, where the managing trader has the opportunity to put into trading the attracted investments of other traders. The PAMM account service is a system in which profits are distributed between managing traders and investors in proportion to the amount of the participating capital.
The manager trades with his own and the investor’s money, the profit received is distributed in proportion to the share of the money invested by the investor. On HotForex there is a specific PAMM account that you can find on the website. It gives you an opportunity to choose the minimum deposit amount by yourself, adjust it whenever you like and it is applicable to both new and existing accounts. The account is completely safe to use as HotForex by itself is a legit and licensed broker enjoying popularity among traders.
What Does The HF PAMM Account Look Like?
PAMM accounts are available for HotForex clients and they are actually one of the most popular options for traders. To enter the corresponding section, select “PAMM” on the right in the list of sections on the site. PAMM accounts on HotForex allow you to invest in experienced PAMM Fund Managers who trade markets on their behalf. To explain more simply the concept of working of PAMM accounts on HotForex we should note that the Manager opens a PAMM Account and activates the account by allocating his initial investments as the Manager’s Capital. PAMM Manager Account will be unlisted from the active PAMM Rankings in case the Manager’s Capital is withdrawn.
As soon as the investor invests in a Manager’s PAMM account, the Manager will start making trades on the provided account using both his or her personal capital and the funds of the investor. Profits and losses in the account are divided amongst the manager and the investor depending on the share of an account.
On HotForex you have a possibility to either open Premium or Premium Plus accounts. They basically have differences in pips and commission fees.
How to Choose an HF PAMM Account Manager
Choosing a PAMM account manager is the first and most important priority for any trader who has just decided to create this type of account. There are many details that every customer should consider before they go for the selection. Most traders, especially the new ones, are not sure about the features and specifics of PAMM accounts and they inadvertently choose the wrong managers. We will have a look below at some of the characteristics which need to be considered before choosing.
The first criterion is without a doubt a manager’s background. You should definitely not go for the manager who has not so much experience under his belt. A proper and good manager should have good experience and results. Some managers are only oriented to extract as much money as possible from you, so every trader should be careful prior to select a manager. When you trust someone with your own funds it is pivotal to know about the background thoroughly.
Paying attention to the win/loss ratio is necessary as well. The win/loss ratio is the ratio that shows the total number of winning trades to the number of losing trades. It actually does not demonstrate how much was won or lost, but simply if they were winners or losers. Of course, you should be looking forward to winning trades as much as possible.
Instruments play a huge role in trading. While we are talking about managers it is important to pay attention to the instruments they have been using. Some are more diverse than others and can use a lot of instruments, while the others only focus on a specific instrument. Looking more closely at these details will help you in the selection process.
Types of HF PAMM Accounts
PAMM accounts come in different types on any Forex broker’s website and it is not a surprising fact. HotForex broker is not an exception in this regard. On the website, you can basically choose between two types of PAMM accounts that are PAMM Premium and PAMM Premium Plus. Let’s find out more about each of them.
In general, these 2 are not significantly different from each other. PAMM Premium supports MetaTrader 4 trading platform. Spreads start from 1.1 pip and the trading instruments include Forex, metals, oil, and indices. The maximum leverage available is 1:300, while the minimum opening deposit starts from $250. The minimum trade size is equal to 0.01 lot. Margin call and stop out levels are 50% and 20% respectively. Telephone trading is possible and the account currency is the United States dollar. There is no commission whatsoever on the PAMM Premium account.
PAMM Premium Plus
We have reviewed the main characteristics of the PAMM Premium account and we can note that the same goes for the PAMM Premium Plus account as well. There are no major differences between these two. Everything except spreads and commissions is the same. While spreads start from 1.1 pip on PAMM Premium, on PAMM Premium Plus they start from 0.3 pips. The commission starts from $5.00 per 100,000 USD traded ($10 round turn). They are pretty similar but these two details could be decisive for some traders.
Pros & Cons of HF PAMM Account
PAMM accounts, even though they are really beneficial for clients, have certain disadvantages and advantages that are pivotal to consider, in order to have a deeper insight into the working process of this account. Let’s have a look at them together.
You already know how an investment account works – a certain trader who has achieved a certain level of success and professionalism in Forex trading creates a special account on the broker’s website. The manager’s benefit is the increased amount of the profit received and a certain percentage of the commission, and the investor’s benefit is a large part of the profit earned by the manager on the amount invested by him. At the same time, for investors, such accounts provide more advantages
A trader just needs to register on the site of a brokerage company and transfer the number of funds to a special account of the manager. The process of working is really simple and straightforward, requiring no complications.
Huge selection of managers
Each broker and in this case HotForex offering this service has a rating of PAMM accounts, where you can choose the most suitable managers using various account assessment tools. This is also possible on HF.
The possibility of forming portfolios
You can form portfolios for diversifying risks and applying “portfolio strategies” – for maximum efficiency, you can form pools of 3-7 most effective accounts and use certain techniques that allow you to increase the amount of income received and avoid loss of funds
Despite the fact that this technology for generating passive income on Forex has significant advantages, its use is accompanied by a number of certain disadvantages, which we will review below.
High level of financial risks
By choosing an ineffective manager, you can lose capital or a huge part of it. That’s why it is important to choose the one that will have decent experience and a good ratio.
The inability to influence the manager’s trading
If unprofitable trades are made in the manager’s trading, the investor cannot stop his trading. In general, it could be deemed as a double-edged sword – you might get benefits at one moment and completely find yourself in losses at the other one.
FAQ on HF PAMM Account
How do I open a PAMM account??
Opening a PAMM account is pretty simple on HotForex. First, you should log in to your myHF area. Click on PAMM. Click the My Investor Account tab to open your PAMM Investor Account.
Then choose the PAMM Managers that suit your preferences and aims. Deposit funds to allocate funds to a PAMM Manager and that’s it.
Is the PAMM account profitable?
Yes, it is. However, when investing in PAMM accounts, you should never forget about the risks. Only by assessing the risks, you will be able to determine how much you are willing to invest in PAMM accounts. In investments with an increased risk, the rule is to invest only a loss limit, i.e. only the amount, the loss of which will not critically affect your financial condition. For beginner PAMM investors, this is an axiom, since full awareness of risks comes only with experience.