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On this page
  • Introduction
  • How Mirror Mode Works
  • Basic Scenarios:
  • Critical Cases When Changing Scaling Parameter
  • Critical Cases When Source Wallet Equity Changes
  • Implementation Notes
  1. COPY TRADE
  2. Copy Trade Methodology

Method 3 (Mirror)

Introduction

Method 3 (Mirror) is a copy trading strategy offered by Dextrabot that enables proportional risk allocation based on relative wallet sizes. This document outlines the key implementation details and important edge cases when using Mirror mode.

How Mirror Mode Works

Mirror mode uses a scaling parameter to determine the proportion of trade size relative to account equity. The system calculates position sizes by comparing the equity ratios between the source trader and follower wallets.

How Increase Works

When the source wallet increases a position, the system calculates the proportional increase for the follower wallet based on:

  • The size of the increase relative to the source wallet's equity

  • The follower wallet's equity

  • The scaling parameter

The system ensures that increases maintain the same risk proportion as the initial position.

How Decrease Works

When the source wallet decreases a position, the follower position decreases by the same percentage as the source position. For example:

  • If the source wallet decreases its position by 10%, the follower wallet will also decrease by 10%

  • This ensures that position sizing remains proportional throughout the trade lifecycle

What is Copy Current?

Copy Current is a feature that allows a follower to start mirroring an existing position of the source wallet. When activated, the system calculates the appropriate position size based on:

  • The current source position

  • The equity ratio between source and follower wallets

  • The scaling parameter

This allows followers to join trades that are already in progress while maintaining proportional risk.

Important Note: You can use mirror method on more than one wallet at the same time, however, in that case closely monitor the equity ratio.

Basic Scenarios:

Mirror mode calculates position sizes using this formula:

Follower Position Size = (Source Position / Source Equity) Γ— Follower Equity Γ— Scaling

Critical Cases When Changing Scaling Parameter

Case 1: Existing Positions After Scaling Change

When a user changes the scaling parameter while positions are still open:

  • All existing open positions will continue to use the previous scaling ratio until they are fully closed

  • The system maintains position tracking based on the scaling parameter that was active when the position was initially opened

  • This ensures consistency in risk management for already established trades

Case 2: New Positions After Scaling Change

After modifying the scaling parameter:

  • Any new positions opened by the source trader will be copied using the new scaling ratio

  • The system calculates position sizes based on the current scaling setting

  • This allows for immediate implementation of the user's updated risk preferences

Case 3: Direction Change After Scaling Modification

If the source trader changes position direction (e.g., from long to short) after a scaling change:

  • The follower system first closes the existing long position completely

  • Then opens a new short position using the new scaling ratio

  • Important detail: In direction change scenarios, the operation happens in a single transaction - the system opens a short position of size equal to (long position size + new short position size)

  • This ensures proper tracking and maintains the desired risk profile

Critical Cases When Source Wallet Equity Changes

In Dextrabot’s Copy Trading System, follower wallets dynamically adjust their positions in real-time based on the source wallet's updated Perp Equity and latest position size.

πŸ“Œ Equity-Based Dynamic Recalculation

Whenever the source wallet:

  • receives a deposit or withdrawal, changing its Perp Equity

  • or modifies the size of an open position (increase/decrease)

β†’ the follower wallet recalculates the size of its currently open position for that specific token.

This recalculation is based on the new ratio between the follower's current equity and the updated Perp Equity of the source wallet.

πŸ” Position Rebalancing Behavior

  • If the follower’s current position no longer matches the updated ratio, it will be adjusted accordingly.

  • This can result in:

    • an increase, if the new calculated size is larger than the current size

    • a decrease, even if the source wallet increased the position, if the new ratio yields a smaller size

This ensures that follower wallets are always aligned with the latest position structure of the source walletβ€”not just in direction, but in proportional exposure as well.

βœ… Why It Matters

This dynamic adjustment allows Dextrabot to maintain consistent risk mirroring even when traders make equity-altering moves. It also helps avoid overexposure or lagging positions due to outdated ratios.

Implementation Notes

  1. The system always prioritizes consistent tracking of existing positions

  2. Changes to scaling or equity only affect future trades or direction changes

  3. For multi-token portfolios, each token is tracked independently

  4. The follower wallet will only track one trader per token at a time

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Last updated 1 month ago

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Method 3 (Mirror) Scenarios