Formula: Equity = Account balance + Floating PnL
Example:
Consider PAMM investment accounts #1 and #2 that are subscribed to a PAMM master account:
Balance on PAMM master account = 0
Balance on PAMM investment account #1 = 0
Balance on PAMM investment account #2 = 0
Step 1: Investor #1 transfers 1,000 USD to the PAMM investment account #1.
During rollover, a transfer is made.
Result: The balances on both the PAMM investment account #1 and PAMM master account have increased by 1,000 USD.
Step 2: The PAMM trader opens a EUR/USD position for buying 1 lot at the price of 1.1555.
Result: This position has been reallocated only to the PAMM investment account #1 (because this account has a positive balance) in the following volume:
Position volume for Investor #1 = 1 lot * 1,000/1,000 = 1 lot
Step 3: EUR/USD is now traded at the price of 1.1600.
Result: The account equities have changed as follows:
Equity of PAMM master account = Equity of PAMM investment account #1 = 1,000 + 1 lot * (1.1600 - 1.1555) * 100,000 = 1,450
Step 4: Investor #2 transfers 550 USD to the PAMM investment account #2.
During rollover, a transfer is made.
Result: The balances on both the PAMM investment account #2 and PAMM master account have increased by 550 USD.
Balance of PAMM master account = 1,000 + 550 = 1,550
Balance of PAMM investment account #2 = 0 + 550 = 550
The open position on the PAMM master account is reallocated to both the PAMM investment accounts #1 and #2 in proportion to equities.
For this purpose, the open EUR/USD position for 1 lot on the PAMM investment account #1 has been closed at the current market price (1.1600).
Profit from 1 lot closed (for PAMM investment account #1) = = 1 lot * (1.1600 - 1.1555) * 100,000 = 450
Balance on PAMM investment account #1 = 1,000 + 450 = 1,450
The following volumes are reallocated from the PAMM master account to the PAMM investment accounts #1 and #2:
Position volume for Investor #1 = 1 lot * 1,450/2,000 = 0.73 lots
Position volume for Investor #2 = 1 lot * 550/2,000 = 0.27 lots
Step 5: EUR/USD is now traded at the price of 1.1700.
Result: The account equities have changed as follows:
Equity of PAMM master account = = 1,550 + 1 lot * (1.1700 - 1.1555) * 100,000 = 3,000
Equity of PAMM investment account #1 = = 1,450 + 0.73 lots * (1.1700 - 1.1600) * 100,000 = 2,180
Equity of PAMM investment account #2 = = 550 + 0.27 lots * (1.1700 - 1.1600) * 100,000 = 820
Step 6: Investor 2 requests to close the PAMM investment account #2 and transfer all funds from this account to the wallet.
During rollover, the request to close the account is executed and a transfer is made.
Result: The open position on the PAMM investment account #2 has been closed at the current market price (1.1700).
Profit from 0.27 lots closed (for PAMM investment account #2) = = 0.27 lots * (1.1700 - 1.1600) * 100,000 = 270
Balance on PAMM investment account #2 = 550 + 270 = 820
The available amount of 820 USD has been withdrawn from the PAMM investment account #2 to the investor’s wallet. The balance on the PAMM master account has reduced by the amount withdrawn from the PAMM investment account #2.
Balance on PAMM master account = 1,550 - 820 = 730
Balance on PAMM investment account #2 = 820 - 820 = 0
The open position on the PAMM master account is reallocated to the PAMM investment account #1 in proportion to equities.
For this purpose, the open EUR/USD position for 0.73 lots on the PAMM investment account #1 has been closed at the current market price (1.1700).
Profit from 0.73 lots closed (for PAMM investment account #1)= 0.73 lots * (1.1700 - 1.1600) * 100,000 = 730
Balance on PAMM investment account #1 = 1,450 + 730 = 2,180
The following volume is reallocated from the PAMM master account to the PAMM investment account #1:
Position volume for Investor #1 = 1 lot * 2,180/2,180 = 1 lot
Step 7: EUR/USD is now traded at the price of 1.1650.
Result: The account equities have changed as follows:
Equity of PAMM master account = = 730 + 1 lot * (1.1650 - 1.1555) * 100,000 = 1,680
Equity of PAMM investment account #1 = = 2,180 + 1 lot * (1.1650 - 1.1700) * 100,000 = 1,680