How a managed programme sizes a trade
When the manager opens a trade, a trade is placed in your own account too. Its size is worked out by the sizing method of the package you joined. Below are the five methods on one example. Change the figures to see what each method would give.
The example
What each method gives
| Method | How it works | On your example | Your trade |
|---|---|---|---|
| Proportional by equity | (investor equity ÷ master equity) × master lots | Proportional by equity: (2000 ÷ 10000) × 1 = 0.2 lots. Rounded down to the 0.01 lot step: 0.2 lots. | 0.20 lots |
| Proportional by balance | (investor balance ÷ master balance) × master lots | Proportional by balance: (2000 ÷ 10000) × 1 = 0.2 lots. Rounded down to the 0.01 lot step: 0.2 lots. | 0.20 lots |
| Fixed lots | The fixed lot size, once for each trade the master opens | Fixed lots: fixed size 0.1 = 0.1 lots. Rounded down to the 0.01 lot step: 0.1 lots. | 0.10 lots |
| Equity-based with multiplier | (investor equity ÷ master equity) × master lots × multiplier | Equity-based with multiplier: (2000 ÷ 10000) × 1 × 0.5 = 0.1 lots. Rounded down to the 0.01 lot step: 0.1 lots. | 0.10 lots |
| Master lot multiplier | Master lots × multiplier | Master lot multiplier: 1 × 0.5 = 0.5 lots. Rounded down to the 0.01 lot step: 0.5 lots. | 0.50 lots |
The master is the manager's own trading account, and the investor is you. A size below the smallest lot is not rounded up: no trade is placed, and the reason is recorded. A manager's trade that closes in part closes the same part of yours.
Equity or balance
Balance is the money in an account without its open trades. Equity is the balance with the profit or loss of the trades that are open. So with an open loss your equity is lower than your balance, and a method that sizes by equity gives you a smaller trade than one that sizes by balance.
Fixed lots and the master lot multiplier do not look at your capital at all: every investor of the package gets the same size, whatever they have in their account. Choose such a package only if that size suits your account.
How the fees and the high water mark work →
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