FX Quant > Proprietary Trading Results vs. Client's Trading Results

It is very important to understand the impact of various fees on the trading system performance.

Performance figures listed on our web site are based on our proprietary trading in a model account with real money. Since the client pays either a performance fee (20% on new net profits or less, depending on account size) or a trading signals fee ($100/month or less, depending on subscription period), the client's rate of return will be lower. We will show the impact of fees on client's performance in the following examples.

Example #1: the client pays an incentive (performance) fee of 20% on new net profit (for accounts under $50,000)

Let us assume we achieved an annualized profit of 26% in our proprietary trading. After deducting 20% from the 26% trading profit, client's actual rate of return (after fees) will be 26% x (1 - 20%/100)  = 20.8% - a "pro-forma rate of return"

Example #2: the client pays a trading signals fee of $1,000 per year and his account size is $50,000.

Assuming we achieved the same annualized profit of 26% ($13,000 profit in one year in a $50,000 account), the trading signals fee of $1,000 lowered the rate of return from 26% to ($13,000-$1,000)/$50,000x100%=24%

Example #3: the client pays a trading signals fee of $100 per month and his account size is $15,000.

Assuming we achieved the same annualized profit of 26% ($325 profit in one month in a $15,000 account), the trading signals fee of $100/month decreased the rate of return from 26% to 12x($325-$100)/$15,000x100%=18% annualized

You can also see this performance (incentive) fee calculation example.