How does the profit-sharing model work?
Profit-Sharing is our best method of automated trading that allows you to allocated funds to expert traders, receiving 100% identical results.
The Profit-Sharing method has benefits over regular copy-trading. With Profit Sharing, you will only pay to the traders a success fee when you have reached new profitable highs, instead of paying monthly without taking into account the results. This is a big incentive for profit-sharing providers to achieve positive results with high-quality strategies that will perform over time.
Another good point about Profit-Sharing is that no minimum investment is required. You can invest from 1 USDT to whatever amount you want to.
Some important concepts related with Profit-Sharing:
- Connecting to a Profit Sharing Service
- Withdraw or Re-invest the profits
- Modify the allocated balance
- Decrease your allocated balance
- Success Fee
- High-Water Mark Calculation
Connecting to a Profit-sharing service:
The balance will be locked and used exclusively.
API connected exchange accounts cannot connect to a Profit-sharing service, only Zignaly accounts.
Find the steps about how to connect to a Profit sharing service in this article: Connect to a Profit Sharing Service
Withdraw or Re-invest the profits
You may choose to withdraw your profits back into your Zignaly exchange account, these will no longer be locked,
Or, to re-invest the profits automatically into your allocated amount.
Modify the allocated balance
You will be only able to increase the allocated balance. This allocated balance will be noted and used in the next open positions.
Decreasing the allocated balance is not permitted.
Decrease your allocated balance
Disconnect from a service
Currently, in the profit-sharing system, you can not disconnect immediately from a provider. When you disconnect, no new positions will open but It requires you to wait until all of the open positions where you are participating have been closed.
The balance will remain locked during this time.
You will not participate in any new positions.
The remaining open positions will continue until they have been closed by the trader.
At the moment that all of the positions have been closed, the remaining amount will be transferred back into your exchange wallet.
Every time that a position is closed, it will calculate the profit/losses from the closed position.
The success fees are only taken once a new trade is closed reaching a new profit high. The success fee will only be taken from the difference between the last high and the new one.
profit levels chart example:
High-Water Mark Calculation
We are using a high-water mark, each time there are profits, and profits + current balance is above the high-water mark, the profits will be shared, however, if there are open positions with losses at that moment, the negative amount will be retained until the positions are closed.
Every time that a position is closed, we analyze the status of the current open positions.
If they are in profit (and generate new all-time high equity value), success fees will be paid, but if the current positions are in loss, we keep the current losses as a retainer. The next time that a position is closed, we calculate the pnl to balance the retain value.
Please be aware that any investment has risks, this risk is multiplied by several factors when you are dealing with derivates. With the profit-sharing model, even when you aren't participating in a position use you are disconnecting) your entire allocated balance is at risk. Please choose your service carefully.
If you want to know more about the analytics in Profit Sharing, take a look to this video: