Basic Logic of Stock Copy Trading

The stock copy trading mechanism replicates trades based on the proportion of available assets.

Calculation Formula

1. Buy:
2. Number of Shares Purchased by the Copy Trader = (Number of Shares Purchased by the Lead Trader) ÷ (Lead Trader's Available Balance Before the Purchase) × (Copy Trader's Available Balance Before the Purchase)
3. The number of shares bought by the copy trader must be at least 0.01 shares, and is rounded down to two decimal places.
4. Partial Sell:
5. Number of Shares Partially Sold by the Copy Trader = (Number of Shares Partially Sold by the Lead Trader) ÷ (Number of Shares Partially Sold by the Lead Trader + Total Current Holdings of the Lead Trader) × (Total Current Holdings of the Copy Trader)
6. If the number of shares sold by the copy trader is ≥ 0.01 shares, it is rounded up to two decimal places.
7. Full Sell:
8. The copy trader will fully close their position after the lead trader fully sells the position.

Example

1. Buy
2. The lead trader buys 100 shares of AAPL at an average price of 100 USD per share, with a trading fee of 60 USD. After the transaction, the lead trader's Available Balance is 5,000 USD.
3. The copy trader's current available balance is 1,999 USDT.
4. Number of Shares Purchased by the Copy Trader = 100 ÷ (100 × 100 + 60 + 5,000) × 1,999 = 13.2735 Shares.
5. Since there is a minimum order size for shares, the Copy Trader's position is truncated to 13.27 shares.
6. Partial Sell
7. The lead trader holds 100 shares of AAPL and partially sells 50 shares.
8. The copy trader holds 2.11 shares.
9. Number of Shares Partially Sold by the Copy Trader = 50 ÷ 100 × 2.11 = 1.055 Shares.
10. According to the calculation logic, the copy trader should sell 1.06 shares.
11. Full Sell
12. If the lead trader fully sells a position, the copy trader will also fully close the corresponding copy position.

Common Copy Trading Failures

1. When the Copy Trader's Available Balance is lower than the Lead Trader's, purchasing 0.01 shares by the Lead Trader may result in a calculated purchase amount of less than 0.01 shares for the Copy Trader based on the asset ratio. Since 0.01 shares is the minimum tradable amount, the Copy Trader's buy order will fail.

Stock Profit Sharing Logic

As a Gate Stock Lead Trader, you can earn a percentage of the net profits generated by your Copy Traders. This profit-sharing mechanism is calculated based on the High Water Mark (HWM) principle.

Profit Sharing Mechanism: High Water Mark (HWM) Calculation for Copy Traders

• The profit share is calculated based on the copy trader's cumulative net PnL during the copy trading period, including both realized and unrealized PnL, in accordance with the High Water Mark principle.
• Profit sharing occurs only when the copy trader's cumulative net PnL exceeds the previously recorded highest net PnL.
• If the copy trader incurs a loss during the copy trading period, the lead trader will only be eligible for profit sharing again after the loss has been fully recovered.
  A new high water mark is established only when the cumulative net P&L exceeds the previous high, ensuring that Lead Traders earn profit sharing only when they generate new profits for Copy Traders.

Calculation Logic

1. Calculate the Copy Trader's cumulative net P&L during the copy trading period.
2. Cumulative Net PnL for the Period = Current Net Asset Value − Total Deposits Since the Start of This Copy Trading Period + Total Withdrawals Since the Start of This Copy Trading Period
3. Total Deposits Since the Start = Initial Copy Trading Capital + Cumulative Deposits During the Copy Trading Period
4. Total Withdrawals Since the Start = Cumulative Withdrawals During the Copy Trading Period
5. Eligible PnL for Profit Sharing = Cumulative Net PnL for the Period − High Water Mark at the Last Profit-Sharing Trigger
6. Profit sharing is calculated only if the eligible P&L for profit sharing is greater than 0. Otherwise, no profit sharing is calculated.
7. Profit Share Amount for This Copy Trader During the Period = Eligible PnL for Profit Sharing × Profit Share Ratio
8. Sum the profit share amounts from all copy traders under the lead trader to calculate the total profit share to be transferred to the lead trader.

Example

Currently unavailable for display outside of Lark Docs.

Core Stock Metrics Calculation

Profit and Loss

1. Calculation Formula
   Period PnL = Current Assets − Total Deposits During the Period + Total Withdrawals During the Period − Initial Assets
2. Example
   Current Assets: 150; Initial Assets: 100; Total Deposits During the Period: 20; Total Withdrawals During the Period: 10 The 7-day PnL is calculated as follows:
   7-day PnL = 150 − 20 + 10 − 100 = 40

Rate of Return

1. Calculation Formula
   Rate of Return = (Ending Assets − Total Deposits During the Period + Total Withdrawals During the Period − Initial Assets) ÷ (Initial Assets + Total Deposits During the Period)
2. Example
   Current Assets: 150; Initial Assets: 100; Total Deposits During the Period: 20; Total Withdrawals During the Period: 10 The 7-day rate of return is calculated as follows:
   7-day rate of return = (150 − 20 + 10 − 100) / (100 + 20) = 33.33%

Sharpe Ratio

1. Calculation Formula
   [Image]

Maximum Drawdown

1. Calculation Formula
   Maximum Drawdown Rate (MDD) = Max[(Historical maximum rate of return – Current rate of return) / (Historical maximum rate of return + 1)]
2. 7-Day Maximum Drawdown Example
   To calculate the maximum drawdown as of 00:00 on June 8, use the rate of return at 00:00 on June 8 as the starting point. Calculate the drawdown over the 7-day period from June 1 to June 8 and identify the maximum drawdown.

Currently unavailable for display outside of Lark Docs.

Frequently Asked Questions About Stock Copy Trading

1. Does stock copy trading have market closure times?
2. Gate's stock market operates 24/7, with no market closure periods, so you can buy and sell at any time. Stock copy trading also supports 24/7 trading.
3. Explanation of Fields in the CFD Copy Trading End Popup
4. Total Copy Trading Assets
5. The net asset value of the copy trading sub-account, including unrealized PnL
6. Estimated Total PnL
7. Displays the Lead Trader's current PnL. Profits are shown as positive values and losses as negative values, with different colors used to distinguish gains and losses. This is the total PnL.
8. Estimated Total PnL = Total Copy Trading Assets − Initial Investment − Cumulative Additional Investment + Cumulative Withdrawals
9. Estimated Profit Share Amount
10. Settled Profit Share Amount + Remaining Profit Share Amount
11. If no profit sharing has been paid, 0.00 USDT is displayed. If profit sharing has been paid to the Lead Trader, the amount is displayed normally.
12. Estimated Receivable Amount
13. Estimated Receivable Amount = Total Copy Trading Assets − Remaining Profit Share Amount
14. Does profit sharing reduce copy trading returns?
15. For copy traders, profit sharing with the lead trader occurs only when there are profits. No profit sharing is charged when there are losses, so only a portion of the profits is shared with the lead trader.
16. If there is a loss during any profit-sharing period, no profit sharing is paid. Profit sharing is paid again only after the loss has been fully recovered and the copy trader generates a new net profit.
17. This profit-sharing mechanism is designed with copy traders' interests in mind, ensuring that profit sharing only occurs when the copy trading strategy generates profits.

Disclaimer

The content provided herein is for reference and educational purposes only and does not constitute any financial, investment, trading, or legal advice, nor does it constitute an offer or solicitation to buy or sell any digital assets. Gate makes no express or implied representations or warranties regarding the accuracy, completeness, or timeliness of the information contained herein. Product features, interfaces, rules, and fee structures may be updated or adjusted at any time. Please refer to the latest announcements and the actual information displayed on the Gate platform for the most accurate details.
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