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GUIDE
What is a performance fee in copy trading? The high-water mark explained
Short answer: a performance fee is a share of the profit you make by copying a strategy, paid to the strategy provider only when your copying account is in new profit. Services that charge on new profit typically use a high-water mark, which means you are not charged again for simply winning back money you had already lost. If there is no new profit, there is no fee.
Key facts
- A performance fee is a percentage of profit, not of your deposit and not of trading volume.
- A high-water mark is the highest value your copying account has reached on which a fee was already charged; fees only apply above it.
- Losses first have to be recovered before a new fee becomes due.
- Exact rules (calculation period, whether open trades count, what happens to deposits and withdrawals) differ per platform. Always read the subscription conditions shown at the broker.
- Vathic Inferno charges a 25% performance fee on new profit only, via RoboForex's copy-trading service. There is no monthly subscription fee from TradeVolumes.
- The fee does not reduce your risk. You can still lose money, including your entire trading balance.
What is a performance fee in copy trading?
When you copy a strategy, trades from the provider's account are opened in your own broker account, sized according to your settings. The provider earns nothing from your deposit itself. Instead, a performance fee lets the provider take an agreed share of the profit your account makes from those copied trades. The broker calculates and transfers the fee automatically, so you do not pay the provider directly.
This model is common because it lines up incentives: the provider is paid when followers make money and not when they lose it. It is not a guarantee of anything, though. A provider on a performance fee can still have losing months, and a fee model says nothing about how much risk a strategy takes.
How does a high-water mark work?
The high-water mark is the reason "new profit only" matters. Think of it as a line drawn at the highest point your account has reached after the last fee. A fee is only charged on profit above that line.
A simple illustration with a 25% fee (illustration only, not a forecast):
| Period | Copying balance | New profit above the mark | Fee at 25% |
|---|---|---|---|
| Start | $100 | – | – |
| Period 1 | $110 | $10 | $2.50 (mark moves to $107.50) |
| Period 2 | $100 | $0 (below the mark) | $0 |
| Period 3 | $107 | $0 (still below $107.50) | $0 |
| Period 4 | $112 | $4.50 | $1.125 |
In periods 2 and 3 the account recovers part of a loss, but nothing is charged because that money is not new profit. Without a high-water mark you could pay a fee twice for the same dollars. How a platform treats deposits and withdrawals can shift the mark, so check those details before you add or remove money.
Is a 25% performance fee high?
Performance fee rates vary widely between providers and platforms; the provider usually sets the rate within the limits the platform allows. Comparing the percentage alone is misleading. What matters is what you keep after fees relative to the risk you took, so compare strategies on their verified record, including maximum drawdown, not only on the fee rate. A low fee on a strategy that takes large risks can cost you far more than a higher fee on a steadier one.
Also check what else you pay. Some services add a monthly subscription, a volume-based fee or wider spreads. For Vathic Inferno, the only cost you pay for copying is the 25% performance fee on new profit. RoboForex pays TradeVolumes a separate referral commission when you register through our link; that comes from the broker and does not cost you anything extra.
Performance fee vs subscription fee: which is better?
A fixed subscription costs the same whether the strategy makes or loses money, which can be expensive for a small account. A performance fee costs nothing in losing periods but takes a larger share in good ones. For accounts starting around $100 a performance fee is usually more proportionate, because a fixed monthly charge could be a large part of the balance. Either way, the fee structure should be the second question you ask, after "is the track record real and is the risk acceptable to me?" Our guide on reading a Myfxbook track record covers that first question.
What should I check before I subscribe?
- The fee percentage and whether it uses a high-water mark.
- How often the fee is calculated and charged.
- Whether there are other costs: subscription, volume fees, minimum deposit.
- A verified track record with gain and drawdown shown together. For Vathic Inferno, that is the public Myfxbook record ↗.
- That you can afford to lose the amount you plan to copy with.
If you decide to copy Vathic Inferno, the setup guide shows the recommended account and subscription settings step by step.
Frequently asked questions
Do I pay a performance fee if the strategy loses money?
No. A performance fee is only charged on new profit. If your copying account is below its previous high-water mark, no fee is due until that loss has been recovered.
What does high-water mark mean in copy trading?
It is the highest value your copying account has reached on which a fee was already charged. A new performance fee is only calculated on profit above that level, so you do not pay twice for the same gains.
How much is the Vathic Inferno performance fee?
25% of new profit only, calculated and collected by RoboForex's copy-trading service. There is no subscription fee from TradeVolumes, and the referral commission RoboForex pays us does not cost you anything extra.
Is the performance fee taken from my deposit?
No. It is a share of profit generated by the copied trades, not a percentage of the money you deposit. Check the broker's subscription conditions for exactly when and how it is calculated.
Does a performance fee make copy trading safer?
No. It aligns the provider's pay with followers' profits, but it does not limit risk. You can still lose money, including your entire trading balance.
Educational content, not investment advice. Leveraged Forex and CFD trading involves a high risk of loss; you can lose your entire trading balance. Past performance does not guarantee future results. If you copy the strategy you pay a 25% performance fee on new profit only; RoboForex pays us a referral commission at no extra cost to you.