This allocation method does not distribute trades directly to each investor’s account. Trades are placed directly from the Manager’s account and the realized Profit/Loss is distributed based on the percentage of total pool contribution by each investor account. ECS offers Money Managers more flexibility to accept Investors of different account sizes.
However, open positions of the manager will not be visible to each investor. Investors balances will changed only after trades are closed.
Example: Investor A has a balance of $500, Investor B has a balance of $1,000, and Investor C has a balance of $5,000. Therefore the total pool is $6,500.
Investor A share of the total pool is 500/6500 = 8%
Investor B share of the total pool is 1000/6500 = 15%
Investor C share of the total pool is 5000/6500 = 77%
The Money Manager places a trade and earns $100. Therefore Investor A would receive $8 (100*0.08), Investor B would receive $15 (100*0.15), and Investor C would receive $77 (100*0.77).