This is why Pro Rata @ 100% is best way to replicate traders performance (with at least $2000 equity)
The calculation of the Signal Provider’s performance then became a simple calculation of the pips gained or lost, and not of the corresponding money according to the Lot Size selected by the trader.
A Signal Provider could vary the Lot Size over time, so sometimes his pip could be worth more or less, but the follower investor did not have the possibility to vary his Lot Size in the same way, hence the pointlessness of showing the monetary performance. Better to show only the pips and use them as an absolute value.
This solution has definitely simplified things, and investors have been able to assess more easily the Signal Providers. However, at a theoretical level, this was definitely not the best solution in order to best replicate their performance.
One of the fundamental part of a Trader’s strategy is Money Management, or, in this case, the ability to vary the percentage of the capital at risk in every trade. To do this, the professional traders calculate the pips they decide to invest in a trade, and then they adjust the Lot Size in order not to risk more than a certain percentage of their funds.
Funds: 10.000 $
Capital at risk in a trade: 1 % = 100 $
Pips of Stop Loss: 50
100 $ / 50 pip = 2 $ = 0,2 Standard Lot = 2 Mini Lot = 20 Micro Lot
To the increase or decrease of the capital, but also to the changes of the pips of Stop Loss, the professional trader modify the Lot Size, to better manage the risk.
But this was not possible with ZuluTrade, or rather, it did not make sense with the “Fixed” option, as investors could not replicate this changes of the Lot Size, so much so that many Signal Providers had adapted their strategies to this type of fixed management.