Top 5 Ways to Make Money on Financial Markets (Part 4)

4. Investment trust management: Earnings with low risks

It is very easy to understand how asset management works: a user puts his funds under the management of a professional. The latter conducts transactions and supervises the trading process, while the investor receives the result in the form of income. There are three types of asset management: PAMM-, MAM- and LAMM accounts.

PAMM is a common trading account. There is a manager who invests his part of the funds in it, and there are investors who also invest funds in the account. You cannot enter or exit this account at any time, because it affects the trading process. The investor cannot influence the trading process and income is proportional to his investments in the general account. Investing in PAMM accounts can be started with minimum amounts.

MAM is an advanced system of PAMM accounts. In this case, the manager and investors have different trading accounts, and transactions are copied to investors' accounts. The transactions are opened in proportion to the manager's capital. For example, the manager opens a deal of 1 lot, but if the investor's account has 10 times more funds, then his account will open a deal of 10 lots. Profits and losses will be corresponding. A MAM account has a minimum threshold for entry - the amount of capital of the manager.

LAMM-account is very similar to MAM: investors and managers have different trading accounts, and trades are copied from the manager's account to the investor's account. Investors can influence trading: close trades set stop-loss and take-profit levels, and adjust the lot size. You can enter and exit a LAMM account at any time, it will not affect your trading. But to enter it is desirable to have on the account an amount equal to the deposit of the manager. Otherwise, some transactions may not be copied.

Advantages of Making Money with Asset Management:

• There are several reasons why asset management is a convenient and profitable way to earn money:
• You don't need knowledge and skills to earn income. Trading is conducted by a professional trader, the user only needs to deposit funds into the account.
• Investors do not need to spend time studying the market and trading, asset management is a passive way to earn income.
• With LAMM and MAM accounts, investors can participate in the trading process and change order settings.
• Investing in PAMM is accessible: one can invest even $10, there is usually no minimum amount limit.
• This method is low-risk because the account manager trades not only client funds but also his own.
• Money of investors has been protected: the PAMM account manager has no right to withdraw funds, and in LAMM- and MAM accounts money is kept in the accounts of investors.

Disadvantages of Earning From Asset Management

There are also disadvantages of trust management, including:

• Commission. Managers charge a percentage or a fixed amount from each investor for their work.
• MAM and LAMM accounts have restrictions on the minimum amount of investment.
• A PAMM account can not enter and exit at any time, as well as trade management.

Who is suited to earn money on trust management:

Getting income through trust management is beneficial for beginners who have no experience and knowledge in the financial sphere, and for experienced market participants it can be a source of additional income. When investing in any of the accounts, it is worth remembering that one cannot make a quick profit here, this method is suitable for supporters of medium-term and long-term strategies.

Follow our updates for more useful information in our series of articles. You can also visit our previous article for a better understanding of this topic.