The short version
With a high-water mark, you only pay a performance fee on profit above your previous best. If a month loses money, that loss has to be earned back first.
A three-month example
Say the fee is 10%. Month 1 loses $500: no fee, and $500 carries forward. Month 2 gains $300: still $200 below your best, so no fee. Month 3 gains $400: $200 of that is new profit, so the fee is $20.
Over three months you made $200 overall and paid $20 — exactly 10% of what you actually earned. Without the high-water mark, the same months would have cost $70.
How CNKTID applies it
Each strategy you copy keeps its own running total. Fees are billed monthly on realized (closed) trades only, and CNKTID's platform share comes out of the trader's fee, not on top of it.