Allocation methods for copy trading and MAM

Learn about various allocation methods for copy trading and MAM to understand how positions are allocated from master accounts to investment accounts

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 Balance

• Proportional to Equity

• Proportional to Balance x Ratio

• Proportional to Equity x Ratio (default)

• Fix Lot Allocation

• 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).