Fees and Costs Explained
Understand how copy trading is priced — performance fees, broker costs and slippage — so you can estimate your real net return.
Performance fee
Copy trading is typically priced through a performance fee — a percentage of the profit the strategy generates for you. If there is no profit in a period, no performance fee is charged for that period. This aligns the trader's interest with yours in the direction of making money.
The exact fee percentage depends on the strategy and broker. Always confirm the current fee with your broker before you start copying, as terms can change and may differ by platform.
The high-water mark
A fair performance fee is charged only on profit above the highest value your account has previously reached — the high-water mark. This means if your account loses money, the strategy must recover that loss before any new fee can be charged. Confirm with your broker whether a high-water mark applies to your arrangement.
A worked example (hypothetical)
Suppose you allocate $10,000 and the performance fee is 30%, with a high-water mark:
- •Month 1: Strategy gains 10% → account at $11,000. Fee = 30% of $1,000 profit = $300. Account after fee = $10,700.
- •Month 2: Strategy loses 5% → account at $10,165. No fee (below high-water mark).
- •Month 3: Strategy gains 8% → account at $10,978. Fee = 30% of $278 (profit above $10,700) = $83. Account after fee = $10,895.
This is a simplified hypothetical illustration. Real fees, returns and compounding will differ. The point: in losing months you bear 100% of the loss; in winning months you share the gain.
Other costs that reduce your net return
- •Broker spreads and commissions on every trade you copy.
- •Slippage — the difference between the provider's fill price and yours.
- •Swap / overnight financing for positions held open across days.
- •Currency conversion costs if your account currency differs from the traded instruments.
For a deeper explanation, read our article on how trading performance fees work.
This page explains how fees generally work. It is not a quote or a contract. Always confirm the exact, current fee terms with your broker before you begin copying.
