BEGINNING OF THE THIRD TRADING PERIOD
In the third trading period, one more investor joins the PAMM account and invests USD 2,400, which increases the total balance of the PAMM account to USD 4,000. This alters the shares of the participants. The manager and the first investor will still have equal shares, i.e. 20% each, while the new third participant, who has invested USD 2,400, will have 60%:
RESULTS OF THE THIRD TRADING PERIOD
Successful trading increases the balance of the PAMM account by 50%. The profits earned are USD 2,000. This amount is distributed among the participants in proportion to their share in the PAMM account:
The investors will each pay the manager 20% in performance fee. However, investor 1 suffered losses in the previous trading period, so the performance fee payable by investor 1 from his profit in the third trading period will be only USD 40, which is 20% of his net profit in the two trading periods (USD 200).
As a result, the manager receives USD 680, investor 1 receives USD 360 and investor 2 receives USD 960.