A simple example
If a strategy generates $1,000 of gross profit and the performance fee is 30%, the fee is $300 and the remaining profit is $700 before any other applicable costs.
Losses are different
A performance fee generally applies to positive performance rather than reducing trading losses. This creates an important asymmetry when modelling upside and downside.
Questions to verify
Check how profit is defined, when the fee is crystallised, whether there is a high-water mark, whether other broker or programme fees apply and whether the published performance is gross or net of fees.
Compare net outcomes
Two strategies with similar gross returns can produce different investor outcomes when their fee structures differ. Always compare like with like.