Also known as: Performance Fee, Profit Split, Carried Interest
Profit share is a compensation model in which a money manager, prop-firm trader, affiliate, or introducing partner earns a predetermined percentage of the net trading profits generated, rather than being paid on trading volume or on client acquisition. If there is no net profit for the period, there is no profit-share payout.
It is the economic engine behind MAM and PAMM managed accounts, copy-trading strategy providers, and proprietary-trading firms. A managed-account manager might take 20–30% of the profit earned on investors' capital; a funded prop trader might keep 80–90% of the profit produced on the firm's capital. The remainder stays with the investor or the firm.
Most profit-share agreements apply a high-water mark, meaning the manager only earns a fee on new profit above the account's previous peak. If an account rises to $12,000, falls to $10,000, then recovers to $11,000, no fee is due on that recovery because the balance is still below the $12,000 high-water mark. This protects investors from paying twice for the same gains.
Because the partner is paid only when the client or fund makes money, profit share is widely seen as the most aligned and most easily marketed model to cautious investors — provided all performance claims remain measured, evidence-based, and free of any guaranteed-return language.
The account or fund runs for a defined performance period — commonly a month or a quarter. At the end of the cycle the platform calculates net profit after spreads, commissions, and swaps, checks it against the high-water mark, applies the agreed percentage, and debits the fee from the investor's balance to the manager's wallet.
In a PAMM structure many investors pool capital under one manager, and profit (or loss) is allocated pro rata by each investor's share before the performance fee is deducted. In a prop-firm structure the trader operates the firm's capital, and after passing an evaluation keeps an agreed split — often rising from 80% toward 90%+ as they scale — while the firm absorbs the drawdown risk.
Agree the profit-share percentage, the performance period, and whether a high-water mark or hurdle rate applies.
The manager or trader trades the capital while the platform records every closed position.
At cycle end the platform nets profit after all trading costs and measures it against the high-water mark.
The agreed percentage of qualifying new profit is computed as the performance fee.
The fee moves to the manager's wallet, the investor keeps the rest, and the high-water mark resets to the new peak.
Why it matters for partnership: Profit share aligns partner income with client outcomes, making it the most trust-building model for MAM/PAMM and prop offers: you earn only when clients do. It converts skeptical investors, but payouts settle per cycle, not instantly.
A signal provider on a PAMM account manages $200,000 of pooled investor capital and posts a 10% net gain over the quarter, or $20,000. With a 25% performance fee and no prior high-water breach, the manager earns $20,000 × 25% = $5,000, and the investors keep the remaining $15,000 of profit for that cycle.
| Feature | Profit share | CPA | RevShare |
|---|---|---|---|
| Paid on | Client's net profit | Qualified acquisition | Broker's spread/commission revenue |
| Partner earns when | Client makes money | Client deposits and qualifies | Client trades (win or lose) |
| Alignment with client | Highest | Low | Medium |
| Best for | Managed accounts, prop | Volume affiliate traffic | Long-term active traders |
| Settlement | End of cycle | One-off per FTD | Ongoing |
Lead your investor pitch with the alignment story — you are paid only on profit above the high-water mark — but state past results as evidence, never as a promise of future returns.
Assuming profit share pays out instantly; it is calculated and disbursed only at the close of the agreed cycle and only on new profit above the high-water mark, so mid-cycle gains can evaporate before any fee is due.
RevShare pays the partner from the broker's spread and commission whether the client wins or loses; profit share pays only from the client's net trading profit.
It is the account's previous peak balance. A performance fee is charged only on new profit above that peak, so investors never pay twice for recovering the same losses.
Managed-account managers commonly take 20–30% of profit, while funded prop traders often keep 80–90% of the profit they produce on firm capital.
At the end of the agreed performance period — usually monthly or quarterly — not per trade and not instantly.
No. You can show verified past performance as evidence, but promising or guaranteeing returns breaches financial-promotion rules in regulated markets.
No. If the period ends with no net profit above the high-water mark, no performance fee is due for that cycle.
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