The return on a PAMM Account is dependent only on the outcome of the Manager’s trading operations. Deposits and withdrawals from the PAMM Account have no effect on the account returns. It is necessary to take this into account if the amount of funds on the account has changed as a result of a payment operation.
Let’s say that 300 USD has been invested in a Manager’s PAMM Account. After a short while, as a result of trading outcomes, the account balance shown in monitoring is 60 USD (i.e. the funds have reduced by 80%).
To bring the returns back to a level where the account is in profit, the account Manager must increase the funds by 5 times (from 60 USD to 300 USD) by conducting successful trading operations.
The Manager decides to make a deposit to the account in order to ease a depart from the ongoing drawdown and as such deposits 40 USD to the account. However, the return percentage remains at -80%.
As a result of successful trading outcomes which bring profit to the account, the account funds are restored to 300 USD.
It would be wrong to assume that the account has completely departed from negative account return and a drawdown since, in order for this to take place, the funds must be increased by 5 times through trading alone. So, as earlier stated, the Manager made a deposit to the account balance, bringing it to 100 USD. Thus, to bring the account returns to a positive percentage value, the Manager must increase the funds to 500 USD.
As such, to completely depart from the drawdown, the Manager must complete trades which bring another 200 USD in profit.