Why does PnL differ between leader and follower accounts?

Follower accounts rarely show exactly the same Profit and Loss (PnL) as the leader account. This article lists the common causes of a PnL difference in Replikanto trade copying, how to compare the leader and follower executions to find out what happened, and what you can do to keep the accounts closer together.

Common causes of PnL differences

Execution and fill differences

• Execution timing: Trades may be executed at slightly different times due to network latency or broker processing times, leading to variations in entry and exit prices. Also, keep in mind that copies to follower accounts are not instant. This can cause a market order to be submitted to the follower account a few milliseconds after the order is filled on the leader account. This can result in an uneven fill price compared to the leader order, especially when copying trades in highly volatile instruments.
• Slippage: Market conditions can cause slippage, where the actual execution price differs from the expected price. This can vary between accounts depending on the broker and market liquidity.
• Partial trade execution: In volatile markets, some trades may be partially filled or not filled at all in one account but executed fully in another. This can also result in an inverted trade where the exit order is filled without the entry order being filled. Find out more in Why is the follower's position opposite to the leader's?

Configuration and account differences

• Account settings: Different settings across your accounts, such as risk parameters, leverage, or contract quantities, can lead to varying PnL outcomes.
• Broker differences: If your copied accounts are with different brokers, variations in fees, spreads, and order execution policies can impact PnL.
• Trading on different instruments: When you have Replikanto configured for multiple instruments and you make trades on different instruments during the day, the account PnL combines all the instruments, so the PnLs may not match even when using Exact Quantity or a Ratio Value of 1.

Trades that never reached the follower (or never came from the copier)

• Disarmed accounts: When using the Follower Guard feature, accounts can be disarmed, causing them not to participate in some trades until they are armed again. The PnL of these accounts will therefore be different.
• Manual trades: Trades made manually on follower accounts without going through the copier can influence the account's PnL, so make sure that only trades made by the copier are part of the PnL calculation.

Check the PnL at the broker first

Always check the PnL of accounts on the broker's website or in the broker's software rather than just in NinjaTrader. There have been cases where NinjaTrader wasn't showing the actual PnL of accounts. Confirm the numbers at the broker before investigating further, otherwise you may be chasing a difference that doesn't exist.

How to find where the difference happened

In order to identify when there were differences in the PnL between the leader account and the follower accounts, it is essential to compare in detail the execution lists of the trades made on both accounts. Here are the suggested steps:

1. Get the execution lists
   • List all trades executed on the leader account with details such as entry/exit time, execution price, number of contracts, etc.
   • Do the same for each follower account.
2. Compare trades
   • Compare each trade on the leader account with the corresponding trade on the follower accounts. Look for differences in execution times, entry/exit prices and quantity of contracts.
   • Identify any occurrence of slippage (difference between the expected price and the actual execution price).
3. Analyze partial execution
   • In volatile markets, check if some trades were partially filled or not executed in a follower account while they were fully executed in the leader account.
4. Identify manual trades
   • Check if there were manual trades on the follower accounts that didn't go through the copier.

After carrying out this detailed comparison, you will be able to identify the exact moments and specific reasons for the PnL differences. This will allow for adjustments and corrective measures to minimize these differences in the future.

How to reduce future differences

• Synchronization of settings: Make sure all accounts have identical settings.
• Choice of brokers: Use brokers with similar execution speeds and policies.
• Regular monitoring: Make regular checks on PnL via the broker's website or software, in addition to NinjaTrader, to ensure that the data shown is accurate.
• Software update: Keep software and trading platforms up to date at all times.

By following these steps, you'll be better prepared to understand and fix PnL differences between your trading accounts.