Profit Sharing - PAMM account
Managing your service is as crucial as managing your trading. To do this effectively, you must first understand how profit sharing works. Here is a summary:
A PAMM (Percentage Allocation Management Module) account allows wealth managers to manage the funds of multiple investors through a single trading account. The wealth manager makes trading decisions on behalf of all investor's funds in the PAMM account, and any profits or losses generated from these trades are distributed among the investors based on their share of the total funds.
Because Profit Sharing is based on success fees, your goal as a wealth manager is to profit for the investors and thus yourself.
Success Fee (SF)
When you generate real profits for the investors, you will be paid a percentage of the profits (success fee).
You can pick the success fee percentage that you want. Just consider:
5% is for Zignaly. If your service success fee is 30%, it means 25% for you and 5% for Zignaly.
You, as manager, never pay the success fee.
The minimum SF should be 0 or 10%. If it is 10%, it will be 5% for the manager and 5% for Zignaly, and if it is 0%, we don't charge anything.
Let's analyze it with an example:
If a user exceeds his HWM by 100 USDT, and your SF is 25%, 20 USDT goes to the manager and 5 USDT to Zignaly.
As a wealth manager, you can discount success fees for a specific investor. Once you have the investor's user ID, go to the Investors tab, filter by that provided number, and apply the discount.
How do we know if there are profits or losses in your service?
We will do an accounting every day in your service. We call this process Profit Sharing Daily Settlement (PSDS). During the PSDS, we analyze the profits and losses in your service over the last 24 hours due to trading. After that, we distribute them proportionally among your investors.
There are two notes:
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Let's analyze it with an example:
The service has 10,000 USDT of AUM, and the manager buys ETH for 5,000 USDT. During the last 24 hours, between the previous and current PSDS, ETH has gone up 15%, but the manager still hasn't sold the coins. Thus, this Profit Sharing service will have ETH valued at 5,750 USDT and 5.000 USDT. The new service value will be 10,750 USDT, generating 7.5% (750 USDT) profits.
How do we know when profits are real?- High Water Mark
To know if the profits are real, we have two systems:
High Water Mark (HWM): The highest profit value attained by any investor since using that service. The HWM is individual for each investor separately.
3 Days Solid: The investor balance should be above the HWM for 3 consecutive days to avoid paying for spikes. Due to that, we consider unrealized PNL.
The HWM starts on the investor's initial investment. Suppose profits are added to the balance and help it to surpass the HWM for 3 consecutive days (3 Days Solid). Then, the investor will pay you the fees for the lowest of those 3, and we will move the HWM up to paid investment value.
For example
Jack invests an initial balance of 1,000 USDT.
On day 1, the balance is 1,050 USDT
On day 2, the balance is 1,100 USDT
On day 3, the balance is 1,075 USDT
The lowest value of these 3 PSDS is 1,050 USDT, so the High Water Mark of the service will be 1,050 USDT from now on. If on day 4 the PSDS is 1,150 USDT, the new HWM will be 1,075 USDT, since it is the lowest value of the last 3 PSDSs performed.
Next, let's learn how to manage funds in your service