High-Water Mark is a method of calculating investment performance fees commonly used in the fund industry. This mechanism requires fund managers to earn performance fees only when the investment portfolio’s value achieves a new historical high. It protects investors from being repeatedly charged performance fees when the investment portfolio’s value falls or rises again to the previous high end after reaching the high end. This mechanism motivates fund managers to pursue higher investor returns while safeguarding their interests.
Pionex has introduced the High-Water Mark Profit-Sharing Mechanism in the Futures Grid CopyBot.Under this mechanism, the lead traders play a role similar to fund managers, and they can continuously receive profit-sharing rewards only if they generate higher returns for their copiers constantly.
Settlement Period
When the Copier’s Futures Grid CopyBot stops, the system automatically calculates and distributes the lead trader’s profit-sharing fees.
Calculation Method
We will demonstrate the copiers’ profit-sharing calculation process during the Futures Grid CopyBots arbitrage process through an example:
| Copiers’ Transaction Record | Profit | Accumulated Profit | The Profit-sharing Fees for Lead Traders (assuming a profit-sharing ratio of 20%). |
| Futures Grid Bot 1 Closed | 100 USDT | 100 USDT | 100*20%=20 USDT |
| Futures Grid Bot 2 Closed | -200 USDT | -100 USDT | No Profit Sharing |
| Futures Grid Bot 3 Closed | 100 USDT | 0 USDT | No Profit Sharing (cumulative profit ≤ 0) |
| Futures Grid Bot 4 Closed | 100 USDT | 100 USDT | No Profit Sharing (cumulative profit <the high end) |
| Futures Grid Bot 5 Closed | -400 USDT | -300 USDT | No Profit Sharing |
| Futures Grid Bot 6 Closed | 500 USDT | 200 USDT | (200-100)*20%=20 USDT |
In conclusion:
1. No profit sharing will occur if the copier’s bot incurs a loss.
2. No profit sharing will occur if the copier bots’ cumulative profit is positive but does not exceed the previous maximum cumulative profit (HWM – Principal).
3. Profit sharing only occurs when the copier bots’ positive cumulative profit exceeds the previous highest cumulative profit (HWM – Principal). Lead traders will share the exceeding part.
FAQ
Q: Why is the profit-sharing fee deducted from me higher than the amount calculated using the High-Water Mark method?
This is a temporary issue. You don’t need to worry; any overcharged fees will be refunded to your CopyBot account immediately.
The reason is that the system did two calculations during the profit-sharing settlement process. Here’s how the two-step calculation process works. First, the system deducts an amount that equals the profit multiplied by the trader’s profit-sharing ratio from the copier’s account. Then, in the second calculation, the system determines the amount of profit sharing to be deducted according to the High-Water Mark calculation method. Suppose the amount deducted for the first time exceeds what was calculated for the second time. In that case, the system automatically returns the excess fees to the copier’s account immediately, which can be used as funds for the following CopyBot.
The ‘Profit Sharing Refunds’ section of the CopyBot Order Details page lists all refunded profits.
