When a strategy provider withdraws some of their funds as profit from their strategy, Copy Dividends provide investors with a part of the investment profit in the case profit is made in the investment. Copy Dividends are automatically transferred from the investment account to the investor’s wallet. This allows investors to earn as a strategy provider does, and doesn’t limit these payouts to the end of the trading period or until the investor stops copying a strategy.
Important to consider with Copy Dividends:
- Copy Dividends will be transferred to the investor's wallet only if the investment made a profit.
- Any stop loss or take profit settings changes will be updated after deducting the Copy Dividends (an example of this is provided later).
- An investor’s set alerts will not be updated due to a Copy Dividend.
- The copying coefficient does not change after any strategy provider’s withdrawal, whether Copy Dividends occurred or not.
The Copy Dividends amount is calculated as a proportion of the strategy provider's withdrawal, but can't be more than Investment Net Profit. Investment Net Profit is worked out as the Investment equity deducted by the investment amount and the floating commission to be paid for the current trading period.
Here’s how Copy Dividends works:
- A strategy provider has USD 1 000 equity within a strategy and a 30% commission rate set. The investor invested USD 100 in this strategy, making the copying coefficient 0.1 (USD 100 / USD 1 000 = 0.1)
- The strategy provider makes a profit of USD 500. This leads to the investment calculating its profit: USD 500 * 0.1 = USD 50.
- The commission share of 30% is calculated: USD 50 * 30% = USD 15 as the strategy provider’s commission, therefore USD 50 - USD 15 = USD 35 as the investor’s Net Profit.
- The investor’s Net Profit is the maximum possible amount that can be awarded by Copy Dividends.
- If the amount to be awarded is less than the investor’s Net Profit, then the full amount will be awarded to the investor. However, if the amount to be awarded is equal to or more than the investor’s Net Profit, only the amount shown to be the investor’s Net Profit can be awarded.
Here are 2 possible Copy Dividends scenarios depending on how much the strategy provider’s chooses to withdraw from the strategy:
The strategy provider decides to withdraw USD 200 profit from their strategy.
- The withdrawal awards the investor with a payout of USD 20, as this reflects the strategy withdrawal of USD 200 multiplied by the copying coefficient of 0.1 (USD 200 * 0.1 = USD 20).
- Therefore, the amount awarded to the investor is USD 20 as it is less than the investor’s Net Profit of USD 35.
The strategy provider decides to withdraw a bigger amount of profit from the strategy: USD 500.
- The withdrawal of USD 500 multiplied by the copying coefficient of 0.1 means a potential payout of USD 50 (USD 500 * 0.1 = USD 50)
- However, since USD 50 is more than our investor’s Net Profit of USD 35, they are awarded the maximum potential payout of USD 35. (USD 50 > USD 35 = USD 35)
- In the end, the withdrawal awards the investor with a payout of USD 35, the maximum allowed based on the investor’s Net Profit.
- The investor’s share of Copy Dividends is not reflected as an exact 10% proportional share.
How do Copy Dividends impact stop loss and take profit?
Stop loss and take profit settings will only be updated after deducting the Copy Dividend.
An investor has USD 1 000 as equity, and set stop loss as USD 400 and take profit as USD 1 600. If their Copy Dividend amounts to USD 300 then the stop loss is adjusted to USD 100 and take profit becomes 1 300. Alternatively, if the Copy Dividend amounts to USD 500, stop loss would’ve been deleted altogether while take profit would’ve been set to USD 1 100.