Notice: Gate.io Copy Trading Has Launched the New Version of ROI Algorithm!

Copy trading is a trading tool that allows users to potentially gain profits by copying the actions of experienced lead traders. To help users understand the principles behind the returns of copy trading, this article will provide a detailed introduction to the platform's latest ROI calculation principles and offer relevant examples to help you understand the nature of returns.

ROI Calculation Formula

General Formula for Copy Trading ROI

Note: The "Interval Maximum Principal" refers to the maximum principal in the account over a certain period, excluding returns, losses, and withdrawals. It only includes the account's principal and deposited amounts.

Example:If the user's initial account equity is 100 and he/she deposits 200, the maximum principal at that time is 300.

If the user deposits another 200, the maximum principal becomes 500.

If the user then withdraws 200, the maximum principal remains 500.

Total ROI

To simplify the calculation process, the total return rate for copy trading can be computed by converting the net asset value (NAV). The NAV typically represents the current value of the investment portfolio or account relative to its initial value. Here are the detailed calculation steps and formulas:

1.Calculate NAV: The initial NAV is 1.

2.Convert NAV to ROI: To convert NAV to return rate, subtract 1 from the NAV and then multiply by 100.

Example Calculation:Suppose your initial investment amount is $10,000, and the final value is $12,000.

Calculate NAV:

Convert NAV to Return Rate:

This method simplifies the ROI calculation process, as it only requires the value of the current NAV and the initial investment amount.

Case Study

Assume that a user's account equity at each hour from 00:00 to 07:00 on June 14, 2024, was as follows: 500 USDT, 400 USDT, 400 USDT, 800 USDT, 1300 USDT, 800 USDT, and 300 USDT. During this period, the user deposited 600 USDT and withdrew 500 USDT. Calculate the ROI at each time period and the total ROI.

|Time|Total Assets|Trading Return|Deposit and Withdrawal|| :------------: | :------------: | :------------: | :------------: ||0:00|500|-100|0||1:00|400|0|0||2:00|400|0|400||3:00|800|500|0||4:00|1300|0|-500||5:00|800|-500|0||6:00|300|200|200||7:00|700|-600|5000|

According to the ROI formula:R0 = 0%R1 =（400-500） 0/500=-0.2=-20%R2 =（400-400 0）/400=0%R3 =（800-400 0-400）/800=0%R4 =（1300-800 0）1300=38.5%R5 = (800-1300 500-0)/1300=0%R6 = (300-800 0)/800=-62.5%R7=(700-300 0-200)/500=40%

Total ROI:

R = 1*（1 0）（1-20%）（1 0）（1 38.5%）（1 0%）*（1-62.5%）-1=-58.45%

The above calculations show that the deposit and withdrawal actions at 02:00 and 04:00 did not affect the ROI. However, the deposit and withdrawal at 06:00 impacted subsequent ROI. The reason is that there were no trading actions during the deposit and withdrawal at 02:00 and 04:00, whereas there was trading operation during the deposit at 06:00. To eliminate the impact of deposits and withdrawals on the ROI, it is recommended that users avoid trading within one hour before and after making a deposit or withdrawal.

Notes for New Version of ROI System:

Avoid Significant Drawdowns: Under the new ROI algorithm, lead traders should avoid significant drawdowns that will lead to prolonged low returns, which can undermine copiers' trust in them and reduce their leading attractiveness.

Avoid Trading During Deposits and Withdrawals: During periods with trading actions, deposits, and withdrawals may cause a slight decrease in ROI, but the impact is minimal. To minimize this effect, it is recommended that users avoid making deposits or withdrawals during active trading periods or, if necessary, wait a certain period (at least one hour) before engaging in trading after making a deposit or withdrawal.

Manual ROI Reset After Liquidation(Function Preview): After a liquidation, users can manually reset their ROI under certain conditions: the user must have no open positions, with an available balance greater than 300 USDT, and no reset happening in the past. The reset operation must be manually triggered and requires selecting a reset time. After the reset, the lead trader's NAV will be initialized to 1. For example, if a lead trader resets at 01:31, when calculating the NAV at around 02:00, the initial NAV of 01:00 will be used as 1 by default. The user’s ROI will start from 0, while historical ROIs remain unchanged. A special indicator will be displayed on the lead trader's page for the long term (as illustrated below) to protect the interests of copiers and help them more accurately select lead traders. Lead traders should trade cautiously to minimize the risk of liquidation.

Note: This feature will be launched on a later date. We will keep users informed then. Please stay tuned!

Conclusion

The new ROI algorithm significantly reduces the impact of deposits and withdrawals on user's returns, ensuring a fair and just trading environment. This improvement helps users obtain a more accurate assessment of their returns, avoiding unnecessary fluctuations caused by deposits and withdrawals. To further ensure the stability of yield, it is recommended that users avoid trading within one hour before and after making deposits or withdrawals, to maintain the accuracy and consistency of their ROI.

About Copy Trading

Gate.io copy trading is a trading aid that allows copiers to synchronously copy the lead trader’s operation behavior on contracts. With more freedom to operate, the lead trader can attract more users to copy him in trading, creating a larger space for dividends. Copiers don’t need to pay additional fees to follow the lead trader but give the trader a small part of the profit generated by copying.

Click to enter:Gate.io Copy Trading: follow the best traders to tradeGate.io Copy Trading - Traders Guide: https://www.gate.io/help/quants/copy-trading/26923/gate.io-copy-trading-traders-guideMore Instructions on Copy Trading: https://www.gate.io/help/quants/copy-tradingIf you have any questions about this activity or copy trading products, please feel free to contact us through Telegram or customer service:Copy Trading Telegram Group: https://t.me/Gateio_Copy_TradingCustomer service: https://t.me/Gate_CopyTradingGate.io is your gateway to crypto.Trade over 1,400 cryptos safely, quickly and easily on Gate.io.Sign up to enter the crypto gateway and get 40% commission from referrals. Download iOS/Android App right now.

Gate.ioAugust 2, 2024