Basic Concepts

Basic concepts we use in TractionEye.

Trader / Lead Trader/KOL

Trader/KOL

Trader — is a user who creates a trading strategy and manages capital within it (opens and closes trading positions).

Trader’s Role:

• Attracts investors’ capital to the strategy.

• Opens and closes trades using the strategy’s capital.

• Bears responsibility for the strategy’s success.

• Earns for themselves and the community with friends.

Investor / Follower

Investor

Investor — user is someone who deposits funds into a trader’s strategy after verifying its activity and profitability.

Investor’s Role:

• Analyzes available strategies and selects a suitable one.

• Earns profits (or incurs losses) based on market conditions and the trader’s performance.

---

Strategy

Strategy — is a trading pool managed by a trader. It includes the trader’s capital and the total capital of followers.

Key Strategy Metrics

1. ROI (Return on Investment) — shows the profitability of a strategy as a percentage.

   • Example: If the ROI is +20%, it means the strategy generated a profit of 20% of the total capital in the strategy.

   • If the ROI is negative (e.g., -10%), it means the strategy incurred a loss of 10% of the total capital in the strategy.

2. AUM (Assets Under Management) — is the total amount of assets held in a trader’s strategy, i.e., the sum of the trader’s capital and that of their followers.

   • Example: If a trader invests 1,000 and followers add 9,000, the strategy’s AUM = $10,000.

   • Why is this important: AUM reflects the total capital managed by the trader within the strategy, which can serve as an indicator of trust in the trader.

3. Win Rate — shows the percentage of profitable trades in a strategy.

   • Example: If a trader opens 10 trades and 7 of them are profitable, the Win Rate = 70%.

   • Why does this matter? A high Win Rate indicates the trader’s consistent performance. This metric helps assess how many of the trader’s trades are profitable.

4. Trading Frequency — indicates how many trades a trader executes per week.

   • Example: If a trader made 10 trades in the past week, the Trading Frequency = 10.

---

How are the trader, investors, and strategy connected?

1. The trader creates a strategy, deposits funds, and starts trading.

2. Followers choose the strategy based on the trader’s performance and invest in it.

3. The strategy unites all participants: the trader makes trading decisions, while investors provide additional capital and earn profits without taking any action themselves.

4. The trader creates a strategy, deposits funds, attracts a community and friends, and trades.

5. Investors select the strategy based on the trader’s results and invest in it.

6. The strategy pools the capital of all participants, with the trader making trading decisions while followers receive a share of profits or losses.

Example:

1. The trader launches a strategy with a personal deposit of $1,000.

2. Followers collectively invest an additional 9,000, bringing the strategy's AUM to 10,000. The trader's capital now represents 10% of the strategy, while followers account for the remaining 90%.

3. The trader opens a trade for 5,000. If the trade generates a profit of $1,000:

   • The followers and the trader split the profit proportionally based on the share of invested capital ($700 is divided proportionally among all followers and the trader).

   • The trader receives a Performance Fee (a fee for successfully managing the total capital) of 20% ($200) + $70 (from their own deposit).