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 invstment accounts.
One of the allocation methods can be selected when creating a copy-trading or MAM subscription in the Back Office.
Note: 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.
1. 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
2. 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
3. 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
4. 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
5. 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).
6. 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 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).