When investors copy the trades made by a strategy provider, they typically trade at different volumes; so how does Social Trading know how to proportionally calculate the result? That’s what the copy ratio is designed to do.
The copy ratio is the ratio calculation that balances the equity of the strategy (provided by the strategy provider) against the investments within the strategy (provided by the investor). The copy ratio multiply lots assigned to copied orders to accurately weight what the strategy provider is trading with and what the investor is investing with.
The copy ratio formula (K) used is this:
K = equityinvestment / (equitystrategy + sum (open_orders_spread_cost))
- equitystrategy - strategy account equity (owned by strategy provider)
- equityinvestment - investment account equity (owned by investors) by investors)
- open_orders_spread_cost - total spread (difference between buy and sell price) cost at the moment of the copy action. Current market prices are logged immediately upon the copy action.
When the strategy has no open orders open_orders_spread_cost will be set as 0.
In scenarios when a copy ratio has to be recalculated, the maximum copy ratio is set at 14.
The copy ratio has been formulated to be as clean and accurate as possible. Investors can trade with ease of mind knowing that how much they put into their investments is proportionally paid out when they profit
Read more about how copying works to see the copy ratio in action during the copying process.