The performance fee is a percentage of the new profit a strategy earns you. It rewards the master only when your account actually makes money — and, thanks to the High-Water Mark, you never pay twice for recovering the same dip.
- Who pays — the investor, out of the investment account.
- Who receives it — the master.
- When — periodically, on the schedule set in the fee plan: daily, weekly, or monthly.
- How much — a percentage of the new profit since the last charge (see below).
The idea: only new profit is charged
A High-Water Mark (HWM) is the highest profit level the fee has already been charged on. The performance fee applies only to profit above that mark — so after a drawdown you pay nothing until your profit climbs past its previous peak.
The fee applies only above the previous peak
| Cumulative net profit | High-Water Mark | Performance fee (20%) |
|---|---|---|
| 1,000 — a new peak | 0 → 1,000 | 20% × 1,000 = 200 |
| 600 — a drawdown | stays 1,000 | none (below the mark) |
| 1,400 — a new high | 1,000 → 1,400 | 20% × 400 = 80 |
The investor pays on the first 1,000 of profit, nothing while the account sits below that mark, and — when profit reaches 1,400 — only on the 400 above the old mark. The same recovery is never charged twice.
What counts as “profit”
The exact base is called net profit, measured on the positions copied from that master. Your broker picks how it is measured, platform-wide — as an investor you simply see the resulting fee.
| Calculation Formula (broker setting) | Net profit is measured as |
|---|---|
| Based on realised PnL | Realized PnL only (closed positions). |
| Based on sum of float and realised PnL | Realized PnL + Floating PnL (open positions too). |
| Based on realised PnL with floating loss | Realized PnL + negative Floating PnL only. |
Where these are set
The Calculation Formula and the Trade fee accounting option are platform-wide switches the broker controls on Settings → Fees. A master only chooses the rate and the period.
Formula
Performance fee = (Net profit − Previous High-Water Mark) × Fee rate
# when the broker sets "Consider Trade fee as loss":
Performance fee = (Net profit − Paid trade fee − Previous High-Water Mark) × Fee rate| Variable | Meaning |
|---|---|
| Net profit | Realized (and, per the Calculation Formula, floating) P&L on positions copied from this master, at payment time. |
| Previous High-Water Mark | The net profit the fee was last calculated on. |
| Paid trade fee | Trade fee amounts recorded for this subscription — subtracted only when the broker enables Consider Trade fee as loss. |
| Fee rate | The rate from the master’s fee plan, written as a decimal — 1% → 0.01, 20% → 0.20. |
Worked example, step by step
A daily plan charges 1%. The broker is set to Based on realised PnL with floating loss and Exclude Trade fee from calculation. The previous High-Water Mark is 12,000 USD. At this payment the copied positions show a realized PnL of 14,519 USD, and the account’s open positions are at a floating loss of −850 USD. Reading the receipt top to bottom:
| Step | Amount (USD) |
|---|---|
| Realized PnL | 14,519.00 |
| Floating PnL (a loss, so this formula includes it) | −850.00 |
| Net profit | 13,669.00 |
| − Previous High-Water Mark | −12,000.00 |
| Net profit increment | 1,669.00 |
| × Fee rate (1% = 0.01) | × 0.01 |
| Performance fee | 16.69 |
The mark then moves up to 13,669.00 USD. If net profit had come in below 12,000.00 USD, no fee would be charged and the mark would stay at 12,000.00 USD until net profit rises above it again.
How the calculation formula changes the fee
The three formulas differ only in how they treat open positions (Floating PnL). Keeping realized PnL 14,519, Previous High-Water Mark 12,000, and rate 1%, the fee depends on whether open positions are currently in profit or in loss:
| Calculation Formula | If open positions +300 (profit) | If open positions −850 (loss) |
|---|---|---|
| Based on realised PnL | 14,519 → 25.19 | 14,519 → 25.19 |
| Based on sum of float and realised PnL | 14,819 → 28.19 | 13,669 → 16.69 |
| Based on realised PnL with floating loss | 14,519 → 25.19 | 13,669 → 16.69 |
What sets the middle option apart
Based on realised PnL with floating loss counts open positions only when they are losing: it matches sum of float and realised when positions are in loss, and matches realised only when they are in profit — so it never charges on unrealized gains, but still lowers the base for unrealized losses.
Effect of “Consider Trade fee as loss”
When the broker enables Consider Trade fee as loss, the Trade fee amounts recorded for the subscription are subtracted before the increment. In the receipt above, with 169 USD of recorded Trade fee amounts, the Performance fee becomes (13,669 − 169 − 12,000) × 0.01 = 15.00 USD.
If it cannot be collected
If the account lacks free funds when the fee is charged, the shortfall becomes accrued fee debt and is recovered later.
