Allocation methods for copy trading and MAM
This article describes the allocation methods available for copy trading and MAM. The methods are used to calculate position sizes that should be copied from a master account to subscribed investment accounts.
One of the following allocation methods can be selected when creating a copy-trading or MAM subscription in the Back Office:
Proportional to Equity x Ratio (default)
Ratio Multiplier (also called the Lot Allocation method)
A position can't be copied with a size that is beyond the minimum or maximum possible size defined for a particular instrument. If a calculated position size is beyond the valid range, the position is copied to an investment account with the minimum or maximum possible size respectively.
Proportional to Balance
Investor’s position size = Master trader’s position size x (Investor's balance / Master trader’s balance)
Example
The master trader's balance = $8,000
The investor's balance = $2,000
The master trader opens a position of 2.00 lots. The investor copies that position as 2.00 x (2000/8000) = 0.50 lots
Proportional to Equity
Investor’s position size = Master trader’s position size x (Investor's equity / Master trader’s equity)
Example
The master trader's equity= $2,000
The investor's equity = $5,000
The master trader opens a position of 2.50 lots. The investor copies that position as 2.50 x (5000/2000) = 6.25 lots
Proportional to Balance x Ratio
Investor’s position size = Master trader’s position size x (Investor's balance / Master trader’s balance) x Ratio
Example
Ratio = 2.5
The master trader's balance = $8,000
The investor's balance = $2,000
The master trader opens a position of 2.00 lots. The investor copies that position as 2.00 x (2000/8000) x 2.5 = 1.25 lots
Proportional to Equity x Ratio (default)
Investor’s position size = Master trader’s position size x (Investor's equity / Master trader’s equity) x Ratio
Example
Ratio = 0.5
The master trader's equity= $2,000
The investor's equity = $5,000
The master trader opens a position of 2.50 lots. The investor copies that position as 2.50 x (5000/2000) x 0.5 = 3.13 lots
Fixed Lot Allocation
Investor’s position = Investor’s fixed position size (Ratio)
The investor’s position size is fixed and is defined in advance for each position that will be copied regardless of balance, equity, or free margin of both master and investment accounts.
Example
Ratio = 0.1
The master trader opens a position of 0.85 lots. The investor copies that position as 0.1 lots (regardless of the position size in the master account and of the balance, equity, or free margin of both master and investment accounts).
Ratio Multiplier (also called the Lot Allocation method)
Investor’s position = Master trader’s position x Ratio
The investor’s position size is a multiplier to the master trader’s position size regardless of the balance, equity, or free margin of both master and investment accounts.
Example 1
Ratio = 1
The master trader opens a position of 2.50 lots. The investor copies that position as 2.50 x 1 = 2.50 lots (the same position size as in the master account).
Example 2
Ratio = 0.5
The master trader opens a position of 2.50 lots. The investor copies that position as 2.50 x 0.5 = 1.25 lots (half of the position size in the master account).
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