What Is a Worked Example of Follower?

Direct answer: what is a worked example of Follower?

A worked example of “Follower” is a fully numeric scenario that shows how follower activity could mirror a master activity inside a copy-trading setup. It lays out every assumption (allocation, initial capital, trade size mapping, timing, and costs) and then calculates what the follower would have bought/sold and what it would have ended up with—using only fixed, hypothetical inputs.

In this context, “Follower” refers to the participant whose account receives trades that are derived from another participant’s (“master’s”) trading actions. The goal of a worked example is not to predict returns, but to let a reader independently reproduce the arithmetic and understand where differences can arise.

How it works: separating stable mechanics from variable conditions

A useful worked example typically separates two layers:

Stable mechanics (assumptions you can write down)

Mapping rule: how a master trade becomes a follower trade (for example, proportional to allocation, or using a fixed multiplier).
Allocation inputs: follower account size, the fraction allocated to copying, and the master trade size used for the mapping.
Execution model: whether fills are assumed to be at the same price as the master signal, or at different prices.
Costs model: spreads, commission, and any copying fee model, expressed as numbers.

Variable conditions (things you cannot assume stay constant)

Market movement: between the master’s action and the follower’s fill.
Order-book differences: the follower’s broker account may get fills at different prices.
Provider/platform behavior: delays, partial fills, or limits can change the final executed quantity.

Because these variable conditions exist, a worked example should clearly state whether it assumes “perfect matching fills” or “imperfect matching fills.”

Worked numerical example (with explicit assumptions)

Below is one self-contained scenario. No live prices are used.

Assumptions

Follower account equity: $10,000.
Copy allocation: 100% (so the entire account is eligible).
Master opens a trade with notional exposure equivalent to $1,000 at the time of the decision.
Mapping rule: follower trade notional = follower allocation fraction × master notional.
Follower fills quantity based on a fixed entry price.
Costs: commission + copying fee are modeled as $5 total for the follower on this one trade.
Exit (closing) price is hypothetical and chosen for illustration.
Assumption A (matching fills): entry and exit prices are identical for master and follower.

Step 1: compute follower position size

Master notional: $1,000.
Follower allocation fraction: 1.00.
Follower notional = 1.00 × $1,000 = $1,000.

Assume the trade is a single currency pair whose price behavior can be represented by a simple profit calculation of price change × notional (this keeps the example general without locking to one exact market convention).

Step 2: set the price change

Hypothetical entry price level: 1.2000.
Hypothetical exit price level: 1.2100.
Price increase = 0.0100 (from 1.2000 to 1.2100).

For the simplified profit model used here, assume profit is proportional to the price change relative to entry:

Return fraction = (exit − entry) / entry = 0.0100 / 1.2000 = 0.008333…
Gross profit = return fraction × follower notional = 0.008333… × $1,000 = $8.33 (rounded).

Step 3: apply costs

Costs (commission + copying fee): $5.00.
Net profit ≈ $8.33 − $5.00 = $3.33.

Assumption B (imperfect matching fills)

Now change only one assumption to show a common failure mode.

Entry fill differs: follower entry is slightly worse.
Use entry = 1.2010 instead of 1.2000, while exit remains 1.2100.
Return fraction = 0.0090 / 1.2010 ≈ 0.007492…
Gross profit ≈ 0.007492… × $1,000 = $7.49.
Net after costs: $7.49 − $5.00 = $2.49.

What this illustrates

Even with the same “copy the master trade” concept, the follower’s result can differ because the follower’s fills and costs differ. A worked example makes that difference visible by changing one assumption at a time.

Limitations and risks: what a worked example cannot guarantee

A worked example describes one set of assumptions; it does not guarantee future outcomes.

Key limitations to include explicitly:

Execution mismatch: partial fills, different execution timing, and slippage can alter the follower’s effective entry/exit. - Cost drag: spreads, commissions, and copying fees reduce performance; the size and timing of costs matter.