When PAMM Trading Goes Wrong

Risk management in forex trading is not limited to only trading in the live markets. It is also about taking care of your trading account from the get-go. Whether you are looking to trade independently, or you are just planning to leave your investment to a money manager for social trading, there are some important things that should never be overlooked, especially choosing the right forex broker. This is even more crucial when you are engaging in PAMM trading.

If this is your first time hearing the term “PAMM trading”, you can read more about this here: https://www.wikifx.com/en/newsdetail/202207183254743592.html

To put it simply, PAMM trading is when a trader puts his or her money into a pool of funds that is under the management of a money manager. The money manager will invest or trade the pool of funds, then the profit is distributed on a predetermined ratio.

This sounds like an easy way to make money, isnt it？ Especially for those who are interested in growing a passive income stream without spending time and effort studying the currency markets.

However, many might not be aware of the danger behind PAMM where things could go wrong.

Money managers are not always reliable. You do not know with 100% certainty if that selected money manager has calculated risk management in place. He could be making you lots of money, and then lose it all in 1 trade. However, this does not mean that the money manager is a scammer. This is merely a sign that the chosen money manager does not have the right skill set as a high-performing forex trader.

Another scenario could be that the money manager and forex broker are both scammers. Here are a few cases that were reported to WikiFX and previously featured on our website.

This is a real-life case wherein the victim was approached by someone on social media who pretended to be a genuine friend. Later, that person introduced him to a broker and money manager for passive investment. However, when the victim tried to withdraw money, they made her pay unnecessary payments and then disappeared entirely. The victim was left with nothing eventually. Read more here: https://www.wikifx.com/en/newsdetail/202208021774513340.html

Though the tactics used by scam money managers and forex brokers could be different from time to time, the essence of their scheme is to take away their trading clients funds.

Always be alert and stay away from promises that seem too good to be true, such as “guaranteed profits”, “sure win”, and promotional propaganda like “deposit $100 to get $1000 back”.

When in doubt, log on to www.wikifx.com and go through our database for verified information about any forex broker. We are a global forex broker regulatory query platform that works cohesively with 30 national regulators worldwide. Therefore, conducting due diligence is always good to keep yourself and your funds safe.