: What are the different compensation schemes available for trading performance In the past year we've worked on automated trading bots. We now have a working solution that has been working consistently well in a live situation

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What are the different compensation schemes available for trading performance
In the past year we've worked on automated trading bots.
We now have a working solution that has been working consistently well in a live situation for months. The trading is purely on crypto-currencies.

This project started as an informal agreement that lasted much longer than originally planned. Now the investors want to use much larger amounts of money and we have discussed that it is time to make a proper agreement.

I have to make a proposal for how I would like to structure it.

I have full ownership and control of the technology.
They have full ownership and control of the capital to invest.

It is worth noting that while I would like to work with them because it went well in the past, I do have other investment options and I would only commit to a deal that is fair.

I am not from the investment world and, while I learned a lot with practice, there are certainly notions and expectations I do not know anything about.

The question is centered around the deal I should propose.

The original idea was to do a performance based high watermark where I'd take profits on a scale, starting at 15%.

Now I learned that there are 2 main methods:

Net (called NAV) where performance fees are taken before the watermark is reset.
Gross (called Claw-Back NAV) where the performance fees are taken after the watermark is reset.

Then there is the question of the period to use to reset the watermark. Are there any rules used to determine the what length makes sense? what metrics are typically considered?

Also, there are rolling watermarks. What are the advantages / disadvantages for this?

Then, the sliding scale for the percentage. Are there industry standards?

But there is also the question of finding a scheme that makes it worthwhile for me to keep the trading active where I could just sit inactive after a win to capture the profits.

To finish there is also the question of other sources of profits: they will bring in external investors as well and will most likely charge them a management fee for this. Does it make sense I claim a part of what they make through that as well?

It would be great to get some clarification on these so I can make sense of what to ask.

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