As an example, let us imagine that there are two potential investors who would like to get started with making a profit from trading, yet are not experienced enough to do so.
A Money Manager would then step into this scenario by offering to trade these investors' funds in their name.
- The Money Manager offers to join the investors' group fund at 35%;
- The first investor deposits 40%;
- The second investor deposits an additional 60%.
For this example, the total amount of funds in the pool will consist of $6,000.
The Money Manager manages to make successful trades from these funds and make a $500 profit.
The PAMM system would then divide this profit accordingly. Meaning, 40% of this profit will go to the first investor and 60% to the second investor. Should the Money Manager make a loss from the trades, the same split is implemented.
This would mean that the system splits any profits or losses according to the percentages the investors have settled on.