While the performance of the EA has improved slightly last week after two weeks below average.
There has been a major development and some disappointing news regarding the PAMM.
It all started when I was having a chat with InstaForex Support to get clarifications over a few details regarding their PAMM.
The following is the Conversation in Full...
[You:]
06:31
You:
Hye, I have a couple of questions about the PAMM system....
1) My PAMM Trader Account is a swap-free account... Will all of my investors automatically become swap-free, or do i have to tell them to register swap-free accounts?
[Alexander Sorokin]
06:34
Alexander Sorokin
No. your trading will be without swaps and IR.
[You:]
06:36
You:
2)"This PAMM-Trader set 30% reward to partners, paid from each successful investment of PAMM-Investor in his account." So the PAMM partner will be paid 30% of what the trader earns (i.e 30% X 25% of what the investor earns), or 30% of what the investor invests?
I know the trader earns everytime the investor withdraws money. But does the partner get repetitive income the same way, or does he get a lumpsum out of the initial investment?
[Alexander Sorokin]
06:40
Alexander Sorokin
Wait a minute, please.
[You:]
06:40
You:
Coz I was under the impression it was the former, the latter won't make sense since the investor would lose 30% of his investment the first day then...
[Alexander Sorokin]
06:45
Alexander Sorokin
PAMM partner get commission from profit of PAMM trader from investment of attracted PAMM Investor.
[You:]
06:46
You:
so 30% of 25% of the profit, yes?
[Alexander Sorokin]
06:48
Alexander Sorokin
30% of PAMM trader's profit for this investment.
[You:]
06:48
You:
For example, the partner brings in an investor who invests 1 million. After trading, there is a profit of 1% so investor earns 10 000, Trader earns 25% = 2 500, so partner gets 30% of that = 750.00 Correct?
[Alexander Sorokin]
06:50
Alexander Sorokin
Yes.
[You:]
06:50
You:
And he earns EVERYTIME the investor withdraws?
[Alexander Sorokin]
06:52
Alexander Sorokin
After returning of investment back.
[You:]
06:52
You:
After returning the investment back, means?
U mean to say until the investor has withdrawn 100% of his investment, i earn nothing?
[Alexander Sorokin]
06:56
Alexander Sorokin
Correct.
[You:]
06:56
You:
Why would i trade for nothing? the investors are making money while i earn 0%?
How does that help motivate the long term safe trader?
[Alexander Sorokin]
06:58
Alexander Sorokin
Investor will take his profit after he will return his investment too.
[You:]
07:00
You:
The investor will be making weekly withdrawals. It's not a lump sum withdrawal.. It'll take 2 years for his 100% to come back to him. What am I supposed to eat until then?
I was under the inpression that i rcv 25% everytime the investor withdraws
if i wait for them to withdraw 100% of their money, I would have to pay a fortune just to maintain the VPS
What is the initial motivation for the trader?
[Alexander Sorokin]
07:02
Alexander Sorokin
Investor make investment to trader. Trader take profit. Investort get back investment with his part of profit and PAMM partner get his part of profit at the same moment.
[You:]
07:03
You:
how often can the investor make withdrawals?
[Alexander Sorokin]
07:03
Alexander Sorokin
It depend on Investor. He also want get his profit.
[You:]
07:04
You:
So he can withdraw a small ammount and leave the rest of his investment to compound, or does he have to withdraw his entire investment the first time?
[Alexander Sorokin]
07:06
Alexander Sorokin
100% of Investment can be returned only. Not less.
[You:]
07:06
You:
So the investor cannot withdraw every week?
How do u expect people to make a continuous income if you dont allow them to take short term profits?
The investor should be able to withdraw as much as he likes
it's his money
[Alexander Sorokin]
07:08
Alexander Sorokin
Investor can invest several times.
[You:]
07:09
You:
yeah, but the account will have open trades that will get a margin call if the investor pulls out 100% of his money
Do u get my point?
[Alexander Sorokin]
07:10
Alexander Sorokin
There can be lots of investor. So risk of margin call is minimum.
[You:]
07:10
You:
nope
every investor will be making withdrawals every monday
on monday, the account balance will be zero
Also, every time the investor pulls all his money out, u guys are charging him, he might just decide to stop investing, and then my system goes to hell
this is a scam
Getting the investor to invest the first time is hard enough
now u want me to ask them to pull out 101% and then put back 100% in every week?
who in their right mind would do that?
[Alexander Sorokin]
07:13
Alexander Sorokin
Trader also can has his own money at account. It is unlikely that all investors will withdraw investment in some time.
[You:]
07:13
You:
If I had my own money, i won't be making a PAMM
i ask you, if u pull out 101% of ur money today, what motivation do u have to throw back the 100% into the pot?
investors are supposed to be able to withdraw 1% per week
so their capital keeps making money for the term of the PAMM
that's the basis of my investment portfolio... continuous passive income every week for 3 years
and at the end of 3 years, the investors pull out 100%
This 100% withdrawal rule means my investors will have to wait 2 years to get paid
that means i have no investors
[Alexander Sorokin]
07:17
Alexander Sorokin
You can see other traders and his trading history at public monitoring here: http://instaforex.com/pamm_monitoring.php
[You:]
07:18
You:
I'm not interested in other traders who operate on a high risk-high reward-short term system
i have a low risk-low yield-long term system
which means my investors must be able to withdraw BIT BY BIT
Nobody's gonna invest 10k usd and wait 2 years to see any returns
Is there any way to allow the investors to withdraw only the profits and keep the capital in the pot until a fixed term?
[Alexander Sorokin]
07:23
Alexander Sorokin
No. Investor can get back 100% of his investment only.
In view of this development, I did send InstaForex.com an e-mail requesting special permission to allow my investors to withdraw small ammounts every week. However, the request ws denied as they said they couldn't change their policies for any individual or group.
As such, I have 3 options:-
1) Ask the investors to wait until the profit reaches 100% before they withdraw.
While compounding might make the account grow slightly faster, (compounding does not help much as the lot size is pretty much fixed unless a certain set of criteria is fulfilled where it is safe to increase the volume...) We'll probably have to wait a little over a year and a half to two years before the 100% mark is reached without withdrawal. Asking investors to wait that long is not only demotivating, it also misses the point of having a continuous income.
So I decided against this.
2) Collect money from all investors and trade from my own personal account, as that will allow me to withdraw as much as i want without any hassle. Payouts will be made manually to all investors after I withdraw the profits to my bank account.
While this might simplify things and give me full control of the project, it not only makes it more difficult to attract investors who've never known me in the past, it's also illegal under Malaysian Law to collect money for investment programs.
So I decided against this as well.
3) Try to find another reputed broker that uses the MetaTrader 4 trading platform, that offers Gold Trading with a similarly fixed spread, and has a PAMM system that allows withdrawal of small amounts from the first week.
Even if I do manage to find a broker which meets all these criteria, I would have to start a new demo at the new broker and make sure there are no problems there. These may require me to modify the EA where needed, and testing that might take up another 10-12 weeks.
So I decided against this as well.
For now, I have decided to put this project on hold until I find a single investor or an alternative plan of action that will allow this project to move further. I apologize for the inconvenience, and am open to any ideas to help launch this project.
However, I will continue to run the demo, and I'll keep posting weekly performance results for everyone's reference.
