Allocation methods for copy trading and MAM
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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 in the Back Office:
(default)
(also called the Lot Allocation method)
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
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
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
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
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).
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).