Introduction to the High-water-mark Profit Share Mechanism

[Estimated reading time: 5 minutes]

What is Profit Share Based on Highest Net Value (High-water-mark Mechanism)?

In copy trading, the elite trader only receives a share of your profits when your account achieves an overall positive profit. The profit share is calculated based on the highest net value, also called the high-water mark (HWM) mechanism. Regardless of subsequent fluctuations in account PnL, the same profit will only be shared once, ensuring you never pay twice for the same profit.

The core principle applies whether you are copy trading spot, futures, or contracts for difference (CFDs).

 

How Does HWM Profit Share Protect You?

• Profit share only applies to profits, with no deductions for losses: Profit share is calculated only on new profits that have not yet been shared. You will not be charged any fees when your account incurs losses.

• The same profit will not be shared repeatedly: Once a portion of profit has been settled and shared, it will not be calculated in later settlements, even if your account experiences subsequent fluctuations.

• Only new, unshared profits are counted: Each settlement only targets the newly generated profit within the corresponding period, calculated with the profit share ratio at that time.

 

Core Calculation Logic (Applies to All Three Products)

Pending profit share = PnL awaiting profit share settlement × profit share ratio

PnL awaiting profit share settlement = total account PnL (by highest net value) − PnL already settled for profit share

• Total account PnL (HWM): The sum of all PnL (realized + unrealized) generated by your account since you started copy trading.

• PnL already settled for profit share: The portion of profit that has already been calculated and settled during the previous profit share settlement, which will not be recalculated thereafter.

• PnL awaiting profit share settlement: The portion of newly generated profit that has not yet been shared at the time of the current settlement.

 

Example (Futures Copy Trading)

Assume the profit share ratio of the elite trader you copy is adjusted daily. The following table shows the profit share settlements over seven consecutive days (in USDT):

Settlement day	Today's PnL	Total account PnL (HWM)	PnL already settled for profit share	PnL awaiting profit share settlement	Profit share ratio	Current pending profit share
Day 1	+1000	1000	0	1000	10%	100
Day 2	–500	500	1000	0	10%	0
Day 3	+2000	2500	1000	1500	12%	180
Day 4	–1000	1500	2500	0	15%	0
Day 5	+500	2000	2500	0	12%	0
Day 6	+300	2300	2500	0	10%	0
Day 7	+500	2800	2500	300	15%	45

How to read this table:

• Days 2 and 4–6: The total account PnL did not exceed the previous high-water mark (the highest point at which profit share was already settled), so no new profit share would be settled, and you would not be charged repeatedly.

• Days 1, 3, and 7: The total account PnL broke through the previous high-water mark, and profit share was calculated only on the excess portion. For example, on Day 3, the total PnL of 2500 USDT exceeded the already shared profit of 1000 USDT. The additional 1500 was calculated at the 12% rate for that day, resulting in a share of 180 USDT.

This is what a high-water mark means: profit share amounts are only linked to the new portion above the historical highest profit level. Drawdowns during the process will not cause you to pay more, and you will not be charged retroactively after recovering losses.

 

FAQs

1. Why am I not being charged for profit share even though I am making a profit?

This is because your total account PnL has not exceeded the historical high-water mark at which profit share was previously settled. For example, if the total profit was 1000 USDT at the last settlement and has already been shared, and your account later rises to 900 USDT and then falls back to 500 USDT, no new profit share will be generated as long as it does not exceed the 1000 USDT high point, even though the account may record a positive profit on a given day.

2. When does settlement take place?

Spot copy trading settles profit share every Monday at 8:00 AM (UTC+8). Futures and CFD (forex/stocks/commodities) copy trading settle daily at 12:00 AM (UTC+8). Additionally, a settlement will be triggered immediately when you stop copy trading, get removed by the elite trader, or the elite trader closes an elite portfolio.

3. What happens if I am holding positions at the time of settlement?

Futures and CFD copy trading only settle profit share for accounts with no open positions. If you still hold open positions at the time of settlement, no settlement will occur this time, but this does not affect the final profit share amount. The system will uniformly calculate all unsettled profits from this period in the next settlement cycle, ensuring nothing is missed or overcharged. Spot copy trading estimates the unshared amount based on unrealized PnL updated hourly, and settles based on the final realized PnL after the elite trader closes the position.

4. Will settlement delays affect the final profit share amount the elite trader receives?

No. Due to batch processing, the actual fund arrival time may be slightly delayed. If you happen to have skipped a settlement round (for example, if the elite trader places a new trade during the settlement process), the system will automatically make up for all unsettled profits in the next settlement cycle, so the final amount remains accurate.

5. What are the differences in the algorithms for spot, futures, and CFD copy trading?

The core formula is consistent across all three products (PnL awaiting profit share settlement × profit share ratio), but there are some differences in the details of PnL statistics:

• Spot copy trading: The settlement cycle is weekly. The PnL awaiting profit share settlement displayed is based on unrealized PnL estimates updated hourly, and the actual amount is subject to the realized PnL settlement after the elite trader closes the position.

• Futures copy trading: The settlement cycle is daily. The total PnL includes funding fees incurred during the holding period (funding fees regularly collected or paid by long and short positions based on market conditions).

• CFD copy trading: The settlement cycle is daily. The total PnL includes overnight swaps (interest incurred for holding positions overnight). The PnL calculation methods for long and short positions differ slightly, and the amount precision is uniformly rounded to two decimal places.

6. Can the profit share ratio be adjusted at any time? Will adjustments affect profits that have already been generated?

The profit share ratio is set by the elite trader and may be adjusted at any time. During each settlement, the system calculates the PnL for that round based on the latest profit share ratio at that time. Portions that have already been settled will not be calculated again due to changes in the ratio.

7. If the profit share ratio is set to 0%, will my profit records still be displayed?

Yes. Even if the profit share ratio is 0%, the system will still record the PnL already settled for profit share, preventing this portion from being repeatedly included in subsequent settlements after any ratio adjustments.