The topic of effective investing has been discussed by international traders and investors for nearly 2 decades. If to trace all the stages of the Forex investment evolution, we can see that major FX brokers introduce new products and services from time to time.
Those companies that launch another innovative product or service designed to let the client make more money at reduced risk can count on becoming really popular and joining those who set trends in the international investment environment. This is what seems to be happening with Prime Broker and its innovative investment solution.
Trust Management Accounts (TMAs) – Next Step in FX Investment Evolution
In order to figure out what is so innovative about Prime Broker’s TMA Service, it’s necessary to take a look at the essence behind other related services offered by other FX brokers before the TMA service was introduced.
Let’s go back to the year of 2000. Back then, the Internet and computer technologies made online FX trading available from almost anywhere around the world. This attracted a lot of new traders, mostly with zero experience and no financial literacy whatsoever. Unlike professionals, they often didn’t know what they were doing, often gambling and losing their money. This is where trust management came in since a lot of novice traders started figuring out that they were not capable of trading Forex successfully and decided to trust their funds with professional instead.
That was a good idea but since there wasn’t any specific and stable mechanism, product or service regulating the procedure, those investments were made chaotically, without any guarantees. Those were risky investments, and people often fell prey to scams.
Later on someone came up with PAMM services, which was the first serious attempt to address those challenges and resolve them to make FX investing more secure and transparent. PAMM services have been increasingly popular with international investors ever since they came into existence.
The thing is, such services allow the investor to find out what to count on and what to expect from such investments. The broker offers a platform to operate such investments and regulate the relations between the investor and the manager while securing the investor’s money against the manager’s possible undesired activities. Simply put, the advantages of PAMM services boil down to the following 3 things:
1. The money is managed by a professional
2. The investor with zero experience avoid making big mistakes and losing money
3. The investor doesn’t have to monitor the process constantly and can focus on other important things
However, now it turns out that PAMM has its drawbacks as well. Even professional trader do make mistakes at times, and there are periods when there is no trading, and the investor doesn’t get any profit over the period.
The next step to reduce the risk and retain the profitability was the introduction of PAMM indexes. Essentially, this is a way to avoid major risks by distributing the funds between several PAMM managers and creating a portfolio. This is called diversification. While the profit is averaged, the risks are reduced as well, which make such PAMM indexes (portfolios) a nice alternative to other conventional FX investments. However, the drawback is still the same – the investors cannot see always see what exactly is going on with the money and still hopes that everything is going to be OK when the contract expires, and it’s time to withdraw the money.
Social trading and auto-copying was the next step in this evolution of FX investing. In this case, you don’t have to trust your money with others. Your money stays with you while you setup your account so as to copy others’ trades based on your choice. You can suspend the subscription at any time if you see that something is going wrong. This means that you are in charge of your money and the entire process and can alter things to your taste whenever you like it. However, there is a shortcoming as well. The thing is, we are dealing with the so-called human factor again. The investor may get scared and interfere with the process, which may lead to unexpected results if the investor doesn’t really know that they are doing. On top of that, greater control over the situation means greater involvement. For instance, you have to set your exposure yourself, which requires expertise and certain skills.
With that being said, Prime Broker experts has spent years studying the FX investment industry. As a result they managed to come up with a next-generation investment solution for everyone seeking increased profit potential and reduced risk. These are trust management accounts (TMAs)
TMAs – Double Profit from a Single Investment
Whatever they used to offer you before the introduction of TMAs, there used to be the same problem with each and every offer. The whole point is, as soon as the manager starts losing money, you start losing it as well. And it’s not always possible to save your capital from those losses. TMAs let you do 3 things:
· Invest profitably even in those managers who are currently seeing a drawdown
· Control the situation at all times and withdraw the funds fast
· Get double profits
Essentially, a TMA investor is like a stock exchange investor getting dividends and profiting from buying and selling stocks. This is who it works:
The trader deposit funds.
The investors offer their own funds and get a TMA share.
The managing trader starts trading and making profits (the way it’s done in PAMM accounts).
If the TMA is profitable, each TMA share increases in value. The investor can sell the share at a higher price and make money once again.
If there is a drawdown, the shares depreciate, so you can buy them cheaper than they used to be and wait till the manager restores the balance. If that’ the case, you both get dividends and can sell the purchased share(s) at a higher price. This is double profit at a time. This is way better than social trading or conventional PAMM accounts.
It’s interesting to note that Prime Broker won a prestigious award at a recent Forex Expo in Moscow. It’s been over 6 months since the TMA solution was launched. Since then it has been getting increasingly popular, especially after Prime Broker purchased PrivateFX and the amount of professional managers increased drastically. The bottom line is, Prime Broker’s TMAs are a next step in FX investing taking the entire industry to a whole new level. You don’t have to be a genius to invest profitably.
