Copy Trading With No Slippage

Coming from centralized exchanges, I was used to my copiers experiencing a certain degree of slippage. That slippage was, in turn, causing me to make more ample moves on the chart, to alleviate the impact on my copiers. No doubt, it made me a more cautious trader, avoiding super-tight Take Profit orders. Instead, I was placing my Take Profits a little bit further than I normally would.

How copy trading works on centralized exchanges is the Lead trader opens a trade, and (estimately) half a second later, the copiers open a proportional trade of their own. For example, if I had a $1,000 account and opened a $100 trade, and someone had assigned $500 to copy me, their account would open a $50 trade. Except their trade was not absolutely simultaneous with mine. Due to that (estimated) half a second delay, their entry price would be slightly different than mine. That’s slippage. The difference in price from one moment to another.

Lighter fixes this. The way copy trading works on Lighter eliminates slippage entirely. Copiers are, in fact, funders of a Pool, and the Leader trades the USDC in that Pool. It’s a single trade, with no smaller (or larger) trades being opened right after. There are no secondary trades to suffer from slippage. The profit from each closed trade is then proportionally split among the funders of the pool. This model tremendously benefits copiers, since everyone’s money gets the exact same opening and closing price.

Now for the funny part: I did not realize the whole thing until a few days ago. That’s two weeks into leading a Lighter Pool. I thought everyone’s accounts were opening secondary trades and eating the slippage. Trading on a DEX is an entirely different animal. The Leader gets to trade naturally, and copiers get to be inside the main (single) trade, instead of being satellites with their earnings stunted by differences in entry price. Everyone benefits. If you’re copying on a CEX, not on Lighter, you’re leaving money on the table.