How Performance Fees Work: Paying Only on Profitable Trades

A performance fee is a payment to a manager that is linked to profit. Instead of paying a fixed amount every month, you pay a percentage of the gains the manager produces. The idea is simple: if the account does not make money on a trade, the manager does not earn a fee on that trade.

Performance fees are common in managed trading because they line up the manager's income with the client's results. But not all performance fees are calculated the same way. Two services can both say "30% performance fee" and still charge very different amounts over time, depending on the rules behind the headline number.

GrowX uses a per-trade model. The fee is worked out separately for every closed trade on your dedicated account, using these rules from our Terms and fees page:

• Profitable closed trade: a performance fee of 30% of the profit of that trade applies.
• Losing closed trade: there is no fee, and the loss is borne by your account in full.
• Each trade stands alone: losses are not refunded and are not netted against later fees.
• Open trades are not charged. The fee only applies once a trade has closed in profit.

The numbers below are made up purely to show the arithmetic. They are not results, targets or forecasts.

Example 1, a profitable trade: a trade closes with a profit of 100 units of your account currency. The fee is 30% of that profit, which is 30. The remaining 70 stays in your account.

Example 2, a losing trade: a trade closes with a loss of 50. There is no fee. The full loss of 50 comes off your account balance.

Example 3, a mix of trades: one trade closes at +100 and the next at -50. The first trade has a fee of 30, the second has none. Your account changes by +100 - 30 - 50, which is +20. Because each trade is calculated on its own, the earlier loss does not reduce the fee on a later profitable trade, and the later loss does not refund an earlier fee.

The main advantage of a per-trade fee is transparency. Every closed trade shows a profit or a loss, and the fee rule is the same for every trade. You can look at your trade history through your investor (read-only) login and check any fee yourself with a calculator.

There is no end-of-quarter calculation to trust, no averaging across months and no separate "management" figure hidden in the small print. If a trade lost money, you can see that no fee was charged on it.

Every fee model has trade-offs, and it is better to know them up front. Some managers use a period-based model with a so-called high-water mark. Under that model, fees are only charged when the account rises above its previous highest value, so earlier losses must be recovered before a new fee is due.

A per-trade model does not work that way. Because losses are not netted against later fees, you can pay fees on profitable trades during a period in which the account as a whole goes down. That is the honest cost of a model that is simple to check trade by trade. Read the Terms carefully and make sure you are comfortable with it before you open an account.

Whether you choose GrowX or someone else, ask these questions and get the answers in writing:

• Is the fee charged per trade, per month, per quarter or per year?
• Is there a management fee on top of the performance fee?
• Are losses netted against later profits before a fee is charged?
• Is the fee taken from the trading account or invoiced separately?
• Can the fee change, and how much notice will you get?
• Can you see every fee next to the trade it came from?

Under our Terms, GrowX may change the fee only with prior notice in your dashboard or by email, and changes do not apply to trades already closed. The current rules are always on the fees page and in the FAQ.

If you want to see how trading is going before you decide, results are shown live at growxfx.com/live. The How it works page explains deposits and withdrawals, and you can sign up when you are ready. Questions about fees can go to [email protected].