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Trading Articles

Fees & ROI calculation for cCopy | Skilling

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FEES CALCULATION

Fee Calculations For Investors/Followers

The cost of following a strategy may vary between Strategy Providers, but will not change during the time you follow a strategy. A Strategy Provider can charge fees based on these three elements (or a combination of any of them): Performance Fee, Management Fee, and Volume Fee, all of which are clearly indicated in the Start Copying box:

Start copyin box

Management Fee (M) is a periodic payment that the Follower pays to a Strategy Provider. It’s an annual percentage (max 10%) of the Follower’s equity. It is accrued daily and charged at the end of the calculation period (30 days after the start of copying). It is also charged when a follower removes funds or stops copying the strategy.

Performance Fee (P) is the percentage (max 30%) of the total Net Profit generated by a strategy on the Copy Trading Account. It is subject to a High-Water Mark and is paid monthly, so a follower never pays twice for the same performance or for underperformance. It is also charged, if applicable, when a follower removes funds or stops copying the strategy.

Volume Fee (V) is the amount (up to 10 USD) that an Investor/Follower pays per one million USD volume copied. It is added to each position, and forms part of the net realized PnL on the Copy Trading Account. If a Strategy Provider charges 10 USD per million, and you copy a trade for 1 million of USDJPY, then you will pay your Strategy Provider 10 USD on the opening of the position and 10 USD on the closing of the position. The accrued amount will be paid monthly. The Volume Fee is not charged in case of the Provider's balance operations (deposit or withdrawal).

Example:

Let’s say for example that an Investor is looking to allocate USD 1000 to copy a strategy that has the following fees, which have been preset by the respective Strategy ProviderProvider:

  • Management Fee - 5%
  • Performance Fee - 10%
  • Volume Fee - USD 5

Start copying screenshot example

What do the fees mean?

  • The investor/follower will incur a charge of 5% of the total equity per year, which amounts to USD 50 of the allocated USD 1000 per year. Calculating it results in (1000.00 * 0.05/365) 0.14 USD per day.
  • The investor/follower will also be charged a performance fee of 10%of the total Net Profit generated by the strategy. I.e, if the Copy Trading Account generates USD 1000 total Net Profit, then USD 100 will be charged.
  • Lastly, the investor/follower will be charged USD 5 for every million in USD volume that is copied from the strategy.

Fees For Strategy Providers

The Strategy Provider decides the size of each fee (can also be 0) - the Management Fee (max 10%), the Performance Fee (max 30%) and the Volume Fee (anything between 1 to 10 USD per USD million volume).

Fees are paid back to the Strategy Providers in the form of a deposit directly to the Provider’s account by Skilling. These kinds of deposits are automatically recalculated in the Strategy Provider’s account currency and can be identified as Strategy Copying Fees. Skilling reimburses Strategy Providers at the end of each month for all realized fees of the previous day and across all the Investors following the strategy.

All fees and commissions paid by the followers are automatically aggregated from the Copy Trading Accounts of all the Followers and deposited into the Provider’s account. Once the total fees are deposited in the Providers account, an email will be sent automatically with a detailed description of the fees paid (per strategy if applicable) to notify the Strategy Provider that the fees have been deposited. The Copy Trading Commission is the sum of all three fees charged from all the followers.

Please note that Followers can be charged anytime, but the Strategy Provider receives the aggregated fees only once during the month.

Terms of Charging the Fees (Triggers)

All fees will be charged on the 1st of each month from the date the copying process started. When a Follower stops copying a strategy, or a Provider stops providing a strategy, the fees are charged from the Copy Trading Accounts. These payments are then logged in the Transactions section of the Follower’s account with the respective note in the transaction tab.

When a Follower withdraws funds, then the platform automatically recalculates the Equity and adjusts the current and future trades according to the Equity-to-Equity model.

If a Follower partially removes funds while copying the strategy, then fees will be charged in proportion to the amount withdrawn relative to the available funds. For example, the Equity equals USD 1000 and the unrealized Performance Fee is USD 200, if the Follower withdraws USD 400, then the Performance Fee of USD 80 will be charged at the time of withdrawal.

If a Strategy Provider stops providing a strategy, all the Followers automatically stop copying it, and all the open positions will be automatically closed for the Followers. All the uncharged fees will be charged after all the positions are closed. (Please note that if relevant markets are closed, the positions will be closed when the market reopens)

ROI CALCULATION

Time-weighted ROI

According to the Global Investment Performance Standards (GIPS), Skilling cTrader Copy applies the Time-Weighted Rate of Return calculation method (TWR). The TWR method supposes that cash inflows, cash outflows, and amounts invested over different time periods have no impact on the resulting value. The history of the account is divided into sub-periods. Each time a new deposit or withdrawal occurs, a new sub-period is formed with the ending of the day also forming a new sub-period.

The ROI of each sub-period is calculated with the following formula:

Rn = (Equity at the end of the sub-period – Equity at the beginning of the sub-period – Deposits + Withdrawals) / Equity at the beginning of the sub-period

To apply the TWR method, combine the ROI for all sub-periods by compounding them together. The result will give you the ROI for the overall period ROI.

TWR (%) = ((1+R1)(1+ R2)(1+ Rn) - 1)*100% where R1 , R2 ,… Rn is ROI for sub-period. *

Example:

  • You had $1000 in your equity at the beginning of the period.
  • You open a position and your equity at the end of the day is increased to $1100.

ROI (sub-period) = (1100 - 1000) / 1000 = 0.1 TWR (%) = (1 + 0.1 – 1) = 0.1 * 100% = 10%

  • You then deposit additional $900 so that your resulting equity is increased to $2000.

ROI (sub-period) = (2000 – 1100 - 900) / 1100 = 0. TWR (%) = (1 + 0.1 ) * (1 + 0) – 1 = 0.1 * 100% = 10% Note that the last sub-period that was formed is due to a deposit amount and does not affect the resulting TWR (%). At the end of the next day, your equity rises to $2100 through trading: ROI (sub-period) = (2100 - 2000) / 2000 = 0.05 or 5% We can see that although $100 was earned in this step it gives you a lesser change in ROI than the same $100 equity increase earned you inStep 1 (5% vs. 10%). The reason behind this is that ROI depends on the starting amount that is used for trading. In these two cases, a different starting amount was used to make a profit.

  • The resulting TWR (%) will be calculated as:

TWR (%) = (1 + 0.1 ) * (1 + 0) * (1 + 0.05) – 1 = 0.155 * 100% = 15.5%

ROI Update Frequency

How frequently is your ROI calculated on cCopy? TheROI you see is updated:

  • every 15 minutes for Strategy Provider accounts
  • daily for Copy Trading Accounts and the accounts that do not provide strategies.

Not investment advice. Past performance does not guarantee or predict future performance.

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