# High-Water Mark Model

The High-Water Mark (HWM) model is the method used to calculate the performance fee that is applied to investors. It stands for the highest value that a copy-trading account has achieved over a period.

The HWM ensures that the strategy provider is not paid twice for the same performance. Thus, the performance commission is charged only when new profit is gained by the copy-trading account.

The HWM performs relying on the following principles:

• At the start of strategy copying, the HWM is the initial investment amount.
• On the 1st of the next month (if no other trigger events happened earlier), the performance fee is calculated and deducted from the investor's account.
• The performance fee is charged on the difference between the account equity at the end of the month and the HWM.
• After the performance fee is deducted, the account equity before the fee realisation (if it exceeds the historical HWM) becomes the new HWM. Otherwise, the historical HWM is retained.
• The account equity at the beginning of the month is updated and does not include the realised performance fee.
• If the account equity at the end of the month is below the HWM, no performance fee is applied to the investor's copy-trading account.

HWM Calculation Example

In this example, an investor allocates EUR 10,000 to copying a strategy with a performance fee of 30%.

Month Account Equity (Month Start) HWM Account Equity (Month End) Chargeable Amount (Month End Equity - HWM) Performance Fee (30% on Profit)
January 10,000 10,000 12,000 2,000 600
February 11,400 12,000 11,000 0 0
March 11,000 12,000 12,500 500 150
April 12,350 12,500 14,000 1,500 450

## HWM Calculation Points¶

The HWM is calculated and the performance fee is charged every time one of the following trigger events occurs.

• 1st of each month.
• The strategy provider stops providing their strategy.
• The investor stops copying the strategy.
• The investor withdraws funds from their copy-trading account.