A person, who has comparatively large sum of money, will sooner or later ask him/herself a question – how to save and multiply his/her funds. Bank rates cannot even cover inflation, which, according to official sources, has reached 18% per annum (and according to unofficial sources has exceeded 25%). This means that even if you keep money in the Bank, you actually lose some of your money. There is another way which will help you not only preserve your money but also increase its value. So, using systematic approach to the process of investment as a whole you can achieve capital growth with minimal risk.
Below you can see an example which clearly demonstrates that you can save and multiply your funds with the help of services offered by LiteForex.
Manager creates PAMM account and deposits Manager’s capital in the amount of $2000. Thus the balance of Investment account of Manager amounts to $2000. PAMM account shows up in the monitoring and Investor1 invests $5000. The balance of his/her Investment account is now equal to $5000. Total balance of PAMM account amounts to $7000.
Manager begins to trade (time 1) on the trading account, equity of which equals $25000.00 at the time of starting trades, this fund is not included in total fund of PAMM account. All transactions carried out by Manager on this account are duplicated on the Investment account of Manager and Investor1.
At time 2, Manager indicates drawdown of 18% on the trading account, equity of the trading account will be equivalent to 20500 at this moment. Funds on the Investment account of Manager and Investor will amount to $1640 + $4100. Both Manager and Investor1 bear losses in the amount of 18% of the initial capital. The balances of Investment accounts of Manager and Investor1 still amount to $2000 and $5000 respectively.
At this moment Investor2 joins the account and invests the amount of $10000. The balance and funds of his/her Investment account will be equal to $10000. Funds of PAMM account will amount to $15740. (Manager’s funds: $1640 + funds of Investor1: $4100 + funds of Investor2: $10000).
Manager continues to trade on the account which at moment3 shows profit of 24% since the start of trades (Time1). Relative increase for Investor2 who joined the account at the moment of drawdown, from time2 to time 3 amounts to (24%- (- 18%)) = 42%. That’s exactly the amount of the increase on the Investment account of Investor2.
Investor 1 decides to abandon PAMM account and withdraw funds. Profit, gained by him on the Investment account is $1200. Investor agreed to give 20% of his/her profit to Manager when he had invested his funds. At the time when Investor submits a request to abandon PAMM account, transactions on his account will be closed, the amount of $240, which is 20% of $1200 will be withdrawn from his account and transferred to Investment account of Manager. The remaining amount of 5960 USD will be transferred to Investor1, his/her account will be detached from PAMM account and transferred into Archive. Investor1 will receive net profit in the amount of 960 USD. Funds on the PAMM account are distributed as follows:
Manager continues to trade. At time 4, profit increases by 3% compared with the previous period; Investor3 deposits $6000 into PAMM account, balance and funds of his/her account become equal to $6000 now. The account represents the following:
After a trading interval, at a certain moment of time, Manager is able to raise profit of the account up to 53% and then he initiates a rollover. As a result of rollover if the interval ends up with profit, then the funds of the Investment account will be distributed as follows:
After settlements with Manager, the funds of the account will be distributed as follows:
Investor1 received $960 in net profit, which is 19.2% of his initial investment of $5000, and he also paid Manager the amount of $240, which is 20% of his/her profit gained on his account.
Investor2 received $5680 in net profit, which is 56.8% of his initial investment of $10000, and he also paid off 20% of the profit gained on his account in the amount of $1420 to Manager.
Investor3 received net profit in the amount of $1248, which is 20.8% of his initial investment of $6000, he as well paid Manager 20% of the profit of $312, accumulated on his/her account.
Manager received $1060 (profit from trading transactions) + $1976 (Manager’s fee) which amounts to 53% + 98.6% respectively in ratio to the amount of his investment of $2000.
Therefore, for quite a short period of time you can gain quite a large income not by applying much effort, or conducting trading operations on the account, which can represent difficulty for those who do not have enough experience.
The example described above clearly illustrates general principles of operation of PAMM accounts in LiteForex Company.