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:
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
Similar behavior applies when the source wallet's perp equity changes due to deposits or withdrawals:
Case 1: Existing Positions After Equity Change
Open positions continue with the same absolute size until closed
No adjustment is made to existing position sizes when source wallet equity changes
This prevents unexpected position adjustments that could impact current trade performance
Case 2: New Positions After Equity Change
New positions will reflect the updated equity ratio between source and follower
Position sizes are calculated based on current equity values at the time of opening
This ensures accurate proportional risk between wallets
Case 3: Direction Change After Equity Modification
Similar to scaling changes, position direction changes after equity modifications follow the same pattern
The system closes the existing position completely
Opens a new position in the opposite direction with size calculated based on current equity values
The transaction is executed as a single operation
Implementation Notes
The system always prioritizes consistent tracking of existing positions
Changes to scaling or equity only affect future trades or direction changes
For multi-token portfolios, each token is tracked independently
The follower wallet will only track one trader per token at a time
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