This method gives each investor a part of the trade based on how much money (balance) they have in their account. Bigger balances get a bigger portion of the trade.
How it works:
- The trade is divided automatically based on the balance of each investor’s account.
- The more money an investor has, the larger share of the trade they receive.
The general formula of the Proportional by Balance Allocation method is this:
Voli = (Balance * MVol) / ∑Balance
Where:
Voli – the volume of the sub-trade
MVol – the volume of the master trade
Balance – Balance of the sub account
∑Balance – the sum of balances of all active sub-accounts
Example: The master trader makes a trade of 10 lots.
- Investor 1 has $10,000: They get 3.33 lots.
- Investor 2 has $5,000: They get 1.67 lots.
- Investor 3 has $15,000: They get 5 lots.
The trade is divided according to how much money each investor has in their account.