Guide

Profit share and the high-water mark: what you really pay

In copy trading, the strategy you copy is most often paid through a fee on your profits. The principle seems simple, but two details make a big difference to what you pay: the high-water mark and the settlement day. This guide explains them with a worked example.

The principle: a percentage of profits, nothing on losses

A 20% fee on profits means that, out of €100 earned by your copy, €20 goes to the strategy and €80 stays in your account. If the copy loses, no fee is due, but the strategy does not refund you anything either.

Other models exist: a fixed monthly subscription, fees on the amount invested, a marked-up spread. With a fee on profits, the strategy is only paid if your copy makes money.

The high-water mark

Without an additional rule, a strategy could lose 30% one month, win back 30% the next, and earn a fee on that recovery, even though you are back where you started.

The high-water mark prevents this: the fee is only taken on gains that exceed the best level your copy has reached so far. After a fall, the strategy must first recover everything before earning a fee again.

A month-by-month example

A 20% fee, settled once a month. The gains and losses are the copy's, before the fee.

Illustrative figures, unrelated to the results of any real strategy.
Month	Result for the month	Cumulative gains	High-water mark	Fee
1	+€500	€500	€500	20% × 500 = €100
2	−€300	€200	€500	€0 (below the high-water mark)
3	+€200	€400	€500	€0 (still below the high-water mark)
4	+€250	€650	€650	20% × 150 = €30

In month 4, only the part above the previous high (650 − 500 = €150) is subject to the fee. Over these four months, the copy gained €650 and paid €130 in fees, or 20% of the actual gain.

The settlement day

The fee is not taken trade by trade, but on a fixed date, the settlement day. At Vantage, the strategy chooses daily, weekly (on Saturday) or monthly (on the 1st of the month) settlement.

Between two settlements, your account shows gains on which the fee has not yet been taken. Do not count on all of it.
The result is calculated over the whole period. With monthly settlement, a month that starts badly and then recovers is only judged at the end.

When the fee is put on hold

At Vantage, the fee is only taken on the settlement day if three conditions are met:

your copy's gains exceed their high-water mark;
your account balance is enough to pay the fee;
after the fee is taken, your margin level stays above 100%.

If the balance or the margin is not enough, for example because open positions are tying up a lot of margin, the fee is put on hold and taken later, once the conditions are met. It is not cancelled.

What to check before copying

The rate: 20% is common, some strategies ask for 30% or more.
Whether there is a high-water mark. Without one, you can pay several times on the same gains.
The settlement cycle, to know when the fee will be taken.
Whether the performance shown is before or after the fee. If it is before the fee, your result will automatically be lower. See our guide why your results differ.

And at PlanetFinance?

The fee is 20% of profits, with a high-water mark, and settled once a month, on the 1st. No fee is taken on losses, nor as long as your copy has not exceeded its previous high. The performance shown on this site is the strategy's, before this fee: the details are on the How the figures are calculated page.