Depending on what a Strategy Provider wishes to charge for his strategy, the cost of following a strategy may vary.
Some may not charge anything providing Free strategies, and some may charge Performance Fee, Management Fee, and Volume Fee, in any combination depending on what they think their strategy is worth, and what they think the Providers would pay for it.
Before an Investor starts copying a strategy, he can check the fees he is going to pay on the Start Copying button of a strategy.
Management Fee (M)¶
Management Fee (M) is a periodic payment that the Follower pays to a Strategy Provider regardless of the strategy performance.
The Management fee is set by a Strategy Provider as an annual percentage of the Follower's equity, but may not exceed 10% of the Investor's equity.
It is accrued daily and charged at the end of the calculation period (1st of each month). It is also charged when a follower removes funds or stops copying the strategy.
Performance Fee (P)¶
Performance Fee (P) is the percentage of the total Net Profit generated by a strategy on the Copy Trading Account.
The Performance Fee may not exceed 30%. It is subject to a High-Water Mark and is paid at the end of each month of copying, so a follower never pays twice for the same performance.
If an Investor copies several strategies, the Performance Fee calculation is applied to each dedicated Copy Trading Account independently.
It is also charged when a follower removes funds or stops copying the strategy..
Volume Fee (V)¶
Volume Fee (V) is the amount (up to 10 USD) an Investor pays per one million volumes copied. It is calculated per side and added to each position.
It means that if a Strategy Provider charges, for example, 10 USD per million, and you copy a trade for 1 million of USDJPY, then you will pay to your Strategy Provider 10 USD on the opening of the position and 10 USD on the closing of the position.
The Volume Fee is charged only in case of the Provider's trading actions and is not charged in case of the Provider's balance operation (deposit or withdrawal).
Let us say an Investor is going to allocate USD 1000 for copying the strategy with the following fees preset by a Provider:
- Management Fee - 5%
- Performance Fee - 10%
- Volume Fee - USD 5
It means that:
- The follower will be charged the amount of 5 percent of the total equity allocated for his Copy Trading Account per year, which is USD 50 of the allocated USD 1000 per year, or 1000.00 * 0.05/365=0.14 per day.
- The follower will be charged 10 percent of the total Net Profit generated by the strategy. Let's say, the Copy Trading Account generates USD 700 total Net Profit, then USD 70 will be charged.
- The follower will be charged the amount of USD 5 for each USD million of the copied volume from the strategy, or USD 0.5 for the 1 lot copied, (1 lot = 100 000). E.g. 1 lot of EURUSD, current quote = 1.19/1.19. Open and close the position. Volume Fee = 1.19 * 100000 / 10^6 * 5 * 2=1.19 (100000 EUR = 1.19 * 100000 USD, 10^6 - 1 million, $5 for each USD million, 2 - open and close the position)
When copying a strategy, check the Performance Fee and the Management Fee in the Transactions tab in the Type column.
The Volume Fee can be found in the History tab.
The unrealized Volume Fee can be found in the Positions tab.
The Volume Fee and the Unrealized Volume Fee columns are disabled by default. Right-click on any column heading and select the column you would like to add from the drop-down.
Any of the Fees can be changed by a Strategy Provider only after the strategy is stopped and no Providers are following it.
When a strategy is stopped, if the fees are greater than zero, then the fees will be charged from the followers according to the actual fee values.
If after the strategy was stopped, a strategy Provider has changed the fees, then the followers will be charged the fees according to the new values after restarting copying.
For Strategy Provider¶
Depending on what a Strategy Provider considers his strategy is worth and what he thinks the other Investors would be willing to pay for it, he can set the fees for copying.
Technically, a Provider may set 0 for all fees for any of his strategies Live or Demo, so that his strategy followers won't be charged and the strategy will be marked as Free.
But when a trader becomes a Strategy Provider, he is allowed to set all three types of fees - the Management Fee (up to 10% of the strategy Investor equity), the Performance Fee (up to 30% of the strategy Investor's Net Profit) and the Volume Fee (anything between 1 to 50 USD per USD million volume).
Fees are paid to the Strategy Providers in the form of a deposit from the broker to one of the Provider's accounts (the Account for Fees).
Such deposits are identified as the Strategy Copying Fees and are automatically converted to the Provider's account currency.
Your broker will reimburse you immediately for any of the realized Performance Fees or Management Fees from any of the Investors from any of Brokers.
The Volume Fee will be charged to the follower when the deals are executed but it will be deposited to the Provider's account along with Performance Fee or Management Fee.
All the fees and commissions paid by the followers are deposited on the Providers account by the separate transactions per each follower.
When the fees are deposited to the Providers account, the Strategy Provider will automatically receive the email with a detailed description of the fees paid per strategy.
The Copy Trading Commission is the sum of all three fees charged from all the followers.
Terms of Charging the Fees (Triggers)¶
When copying a strategy or providing a strategy for copying, you should note that the Volume Fee, the Performance Fee and the Management Fee are charged on the 1st of each month.
When a Follower stops copying a strategy, or a Provider stops providing a strategy for copying, the Volume Fee, the Performance Fee and Management Fee are deducted from the Copy Trading Account and those payments are logged in the Transactions section of the Follower's account with the respective note in the grid.
When a Follower withdraws funds from his Copying Trading Account (removes funds to his trading account), then the platform automatically recalculates the Equity and adjusts the current and future trades according to the Equity-to-Equity model.
If a Follower removes funds from his Copy Trading Account while copying a strategy, then the Volume Fee, the Performance Fee and Management Fee will be charged at once and in full.
The payout to the Provider's account will be made immediately after the follower is charged.
If a Provider adds funds to the strategy account, then the platform automatically decreases the follower's positions, and if the Provider withdraws funds decreasing his balance then the platform automatically increases the follower's positions. Note that depositing the follower's fees to the Provider's account doesn't trigger the recalculation of the follower's volume, to avoid the unplanned volume correction.
When a Strategy Provider stops providing a strategy for copying, all the Investors automatically stop copying it, and all the open positions within the strategy will be automatically closed for the Followers (or will remain closed if the market is closed), and all the unrealized fees will be charged after all the positions are closed.