The list of investment opportunities in the Forex  market

Every year, a range of Forex investment projects and services is increasing. Investors can choose PAMM projects, social trading, manual and semi-automatic, or automatic trading. 

A choice of investment project - how to start?

Before making an investment a trader must set a goal. If a goal is adequate, a trader will be able to select the best investment instrument. An approach to any task, including investment, shall be based on the assessment of flexibility, attainability and specifics of the task. In view of the loss possibility, a trader shall develop a strategy, which will prevent the loss of more than 10% of his/her investment. As a rule, an investor is entitled to set the level of risk limit. 

When choosing a manager of the account a trader shall pay attention to a manager’s trading experience, amount of the initial capital and risk attitude.

Investment options based on the types of investment are presented in the table below:  


Types of trading Types of investments Required characteristics
A trader trades him/herself, Manual trading Active High level of knowledge and experience,
Requires a lot of time,
The size of initial capital can vary,
Possibility of high profit,
Risks vary from high to low depending on the size of the leverage,
Low non-trading risk.
Automated trading by a trader Active High level of knowledge and experience
Requires a lot of time at the initial stage and less time after setting parameters of the system,
The size of initial capital is of no importance,
Possibility of high profit,
Risks vary from high to low depending on the size of the leverage,
Low non-trading risk. 
PAMM accounts Passive Basic knowledge,
Does not require a lot of time,
High non-trading risk, Risk level will depend on the strategy selected by a Manager (usually the risk is high)
Portfolio of PAMM accounts Passive Basic knowledge,
Requires a lot of time during the formation of the portfolio and less time after that ,
Required size of the capital is from 1000 USD,
Average level of trading and non-trading risks 
PAMM indices Passive Basic knowledge,
Requires little time,
Average size of capital investment,
Average potential profit,
Average level of trading and non-trading risks 
Copy trading Active-Passive High level of knowledge and experience,
Requires little time (if automated copy is set up),
Average size of capital investment,
Profit will vary depending on a strategy of a PAMM Manager,
High level of non-trading risks (mistakes of a trader, whose transactions are copied),
Trading risks will depend on Manager’s strategy, usually the risk is high
Trust management Passive Minimum time,
Different strategies to vary levels of risk and profit,
High levels of non-trading risk, as the result of trades do not depend on a trader, Large amount of initial capital 

Self-trading at Forex

When a trader executes trading operations by him/herself, an amount of investment can be vary from 10 USD on a cent account to the higher amounts on the standard accounts. Brokers offer high-quality terminals for conducting trading operations and a wide range of analytical analysis, which can be helpful   for making trading decisions. 
  • Manual trading means that a trader makes trading decisions and analyses the market him/herself with the help of trading platforms, technical analysis and Forex economic calendar. The trader develops his/her own trading strategy.
  • Automatic trading means that all trading operations will be conducted by a robot, programmed to carry out trading in accordance with the trader’s instructions.
  • Semi automatic trading means that trading signals are searched by the automated system, but their interpretation, mathematical calculations and trading operations are implemented by a trader.
Regardless of the type of trading, a trader may face some negative moments, such as:
  • At the beginning a trader will need to devote a lot of time to trading;
  • Profit will depend only on the skills of a trader;
  • Lack of knowledge and experience may lead to losses;
There are also positive moments, such as 
  • Low non-trading risks: a trader can choose a broker with the modern system of trades execution (ECN, STP);
  • Trading results depend only on a trader;
  • Potential profit is unlimited;
  • Initial amount of investment can vary;
  • No additional payments;
  • A trader will gain his/her own trading experience.

Investments into PAMM accounts 

A chance to earn additional income at Forex market attracts many investors. However, as long as many of them do not have sufficient skills and time to trade, they try to find the way, allowing them to receive profit with the help of experience of the professional traders. PAMM investments can be subdivided into three groups:
  • PAMM-account is the easiest option of investment. A trader can just connect to a Manager’s account. Every manager has his/her own trading strategy and an investor knows what trading strategy is applied by a Manager due to PAMM monitoring. The size of investment is optional.
  • PAMM portfolio is a combination of PAMM-accounts of different managers, using different strategies, aimed at achieving highest profit with the least risks. An investor can invest into an existing portfolio, or generate his/her own portfolio.
  • PAMM-indices – the most reliable tool of all PAMM investments, as PAMM index can include accounts of up to 8 managers.

Characteristics of the PAMM accounts:

Tools Advantages Disadvantages
PAMM account Low initial investment,
Low knowledge ,
Low threshold of investmen

High level human factor risk due to human factor,

Funds are controlled by the other trader,

Minimal amount of investment is determined by a Manager (from $10 and higher),

Penalty for early withdrawal 

PAMM portfolio

Diversification of risks,

Basic knowledge for assessing manager’s skills. Higher chance of profit due to different strategies applied by the managers. Managers are interested in profit.

Low profit compared with PAMM accounts,

 Initial investment is from $1000,

Investor’s funds are controlled a manager.
PAMM index

The funds remain in a trader’s account,

Minimal amount of investment is 100 USD,

The trader can invest into the best accounts. 

Special knowledge is not required.

Shorter investing period, no penalties for the early withdrawal.

Income of less than 10 USD is not reinvested,

A trader cannot change a structure of portfolio

Copying

Copying of the transactions is getting very popular recently. Copy trading enables a trader to connect to an account of a Manager through special services and copy his/her transactions. Copy trading has several advantages:
  • Trader’s funds always remain on his/her account; 
  • A trader can interfere into a trading process making adjustment to the deals if needed;






The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.



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