Initial Deposit:
Current Balance:
Manager Smith
Investor Jackson
Investor Johnson
Manager Smith Opens a PAMM Account
Trader Smith has been trading Forex successfully for several years. He decides it’s time he should start earning some additional income for his trading skills and opens a PAMM Account with ForexTime. He begins with 2,000 USD as the Manager's Capital (his public investment in the PAMM Account, which serves as a guarantee to investors that he will keep their interests in mind). We will now refer to him as Manager Smith.
Investor Jackson and Investor Johnson Join
Smith's next step is to bring in clients to invest in his account. Manager Smith creates a "public" Manager’s Proposal, in which he determines that his bonus compensation will be 20% from the investors’ share of the profits.
Having seen the impressive results of Smith's trading in the PAMM Account Ratings, Investors Jackson and Johnson decide to invest. Jackson invests 5,000 USD. Johnson invests 3,000 USD. The balance of the PAMM Account is now 10,000 USD.
Jackson
Johnson
Smith
PAMM Account Balance at the Start of the Trading Interval
Initial Deposit:
Current Balance:
Profits Withdrawn
Manager Smith
Investor Jackson
Investor Johnson
After the First Month of Trading
Manager Smith has a successful first month and his PAMM Account achieves a 50% return (5,000 USD) on the initial investment (10,000 USD). The balance of the account is now 15,000 USD.
The profits (5,000 USD) are distributed to the investors (including Smith) based on their initial deposit in the PAMM Account. With an initial investment of 5,000 USD, Investor Jackson’s share of the profits will be 2,500 USD (50% of 5,000). Manager Smith will be rewarded with 20% of this amount, or 500 USD.
With an initial investment of 3,000 USD, Investor Johnson’s share of the profit will be 1,500 USD (50% of 3,000). Manager Smith will receive 300 USD (20%) of this amount.
How the Profits are Divided
After the first month of trading, the profits earned on the PAMM Account are divided like this:
- Investor Jackson: 2,000 USD
- Investor Johnson: 1,200 USD
- Manager Smith: 1,800 USD (800 USD from investors)
Compensation
Jackson
Johnson
Smith
PAMM Account Balance at the End of the First Month of Trading
Initial Deposit:
Current Balance:
Manager Smith
Investor Jackson
Investor Johnson
Investor Ford
Smith and Johnson Make Withdrawals
Before the beginnning of the second month of trading, Manager Smith withdraws his profits earned during the first month (1,800 USD). The Manager's Capital remains 2,000 USD (the Manager is not allowed to decrease the Manager's Capital).
Investor Jackson chooses to reinvest all of his 7,000 USD back into the PAMM Account, including the 2,000 USD of profit from the first month of trading.
Investor Johnson withdraws 200 USD and reinvests the remainder in the PAMM Account. His total investment in the PAMM Account is now 4,000 USD.
Jackson
Johnson
Smith
Reinvestment and Withdrawal
Ford Joins the PAMM Account
Investor Ford hears about Manager Smith’s success and decides to invest 1,000 USD into the PAMM Account.
Jackson
Johnson
Ford
Smith
PAMM Account at the Start of the Second Trading Month
Initial Deposit:
Current Balance:
Manager Smith
Investor Jackson
Investor Johnson
Investor Ford
After the Second Month of Trading
Manager Smith’s second month of trading is even more successful than the first month. The PAMM Account achieves a return of 100% (14,000 USD) on the starting balance of 14,000 USD. The PAMM Account balance is now 28,000 USD.
Once again, the profits are divided up among the investors in the PAMM Account (including the Manager) based on Smith's conditions in the Manager's Proposal. After the second month of trading, each investor will be entitled to a share of the profits 100% the size of their initial investment for the month:
- Jackson receives 7,000 USD as his share of the profit and pays Manager Smith 20% (1,400 USD) as compensation for successful trading.
- Jonhson receives 4,000 USD as his share of the profit and pays Manager Smith 800 USD as compensation.
- Ford receives 1,000 USD as his share of the profit and pays Manager Smith 200 USD as compensation.
At the end of the second month of trading, the 14,000 USD in profits will be divided as follows:
- Investor Jackson: 5,600 USD
- Investor Johnson: 3,200 USD
- Investor Ford: 800 USD
- Manager Smith: 4,400 USD (2,400 from investors)
Compensation
Jackson
Johnson
Ford
Smith
PAMM Account at the End of the Second Month of Trading
* This example is intended to serve as a visual demonstration of how the ForexTime PAMM Account works. We hope that it gives you a better understanding of how profits are earned and distributed on the PAMM Account.
