What is performance fee?

What it means

Typical rates run from ten to thirty percent of profit, sometimes to fifty. The important detail is not the rate but whether it is charged against a high water mark — the previous peak equity. With one, a provider who loses 20% must recover it before earning again. Without one, they can charge you on the recovery of losses they caused.

Why it matters

The incentive structure deserves more scrutiny than the number. A provider paid on profits but not charged for losses holds a one-sided bet, and the rational response to a one-sided bet is more risk than the subscriber would choose. This is the structural reason copy trading skews aggressive, independent of any individual provider's intentions.

What this changes in practice

Compare the total cost honestly against the alternative. A performance fee is a recurring share of everything the account ever makes; buying software is a fixed cost that does not scale with success. On a small account the fee is cheaper. On an account that grows, the software stops being the expensive option surprisingly quickly.