When Investors copy the trades made by a Strategy Provider (SP), 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 or copy coefficient is the ratio of the investment equity (provided by the Investor) to the strategy’s equity (provided by the SP). This is used to calculate how many lots are to be accurately assigned to Investors based on their investment.
Copy ratio or copy coefficient never increases after the start of investment regardless of any deposits/withdrawals on the strategy account, and is not affected by the end of the trading period.
Calculation formula
Copy ratio (K) = equityinvestment / (equitystrategy + sum (open_orders_spread_cost))
- equitystrategy - strategy account equity
- equityinvestment - investment account equity
- open_orders_spread_cost - strategy orders spread cost at the moment of the copy action. Current market prices are logged immediately upon initiation of 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.