You click "copy," and trades start appearing in your account. But what actually happens between the trader's action and your execution? Understanding the mechanics helps you set better expectations.
The Basic Flow#
- Trader opens a position on their exchange
- The copy trading platform detects it
- Platform calculates your position size based on your settings
- Platform sends an order to your connected exchange
- Your order executes
Simple in theory. But each step introduces variables.
Detection and Latency#
Copy trading platforms monitor traders through APIs or on chain data. There's always some delay between when the trader acts and when the platform sees it.
API based tracking: Platforms poll the trader's account at regular intervals. Delay can be seconds to minutes depending on how frequently they check.
On chain tracking (like Hyperliquid): Transactions are visible on chain, often within seconds. Faster detection.
This latency matters. In fast moving markets, the price you get might be different from the trader's entry price. That's slippage, not because of execution, but because of time delay.
Mirrorly executes trades within seconds of detection, keeping your entries as close to the trader's as possible.
Position Size Calculation#
When the trader opens a $50,000 position, you don't automatically open $50,000. Your size depends on your settings:
- Fixed size - You set a specific dollar amount per trade. Trader opens $50k, you open $500.
- Ratio to trader - You copy proportionally. If you're set to 1% of the trader's size and they open $50k, you open $500.
- Ratio to their portfolio - You allocate based on how much of their portfolio they're risking, applied to your allocation.
Different platforms handle this differently. Know how yours works.
Execution#
Once the platform calculates your size, it sends an order to your exchange. This is usually a market order to ensure it fills quickly.
Why market orders? Limit orders might not fill if price moves away. The point of copy trading is to mirror the trader. Missing trades defeats the purpose.
The tradeoff: Market orders mean taker fees and potential slippage. You might get a slightly worse price than the trader.
What About Closes and Adjustments?#
Copy trading isn't just about opens. When the trader closes fully, your position closes. When they take partial profit, you take the same percentage. When they add to the position, you add proportionally. When they get stopped out, you get stopped out.
Each action triggers the same flow: detect, calculate, execute.
Cross Exchange Copying#
This is where it gets interesting. On Mirrorly, you can copy a trader on Hyperliquid while executing on Bybit.
How it works: The platform tracks the trader's Hyperliquid positions. When they open a BTC long, it sends a BTC long to your Bybit account. Same asset, same direction, different exchange.
Why it matters: You're not limited to one exchange. You can use whichever exchange you prefer or already have funds on. Just make sure your exchange lists the same asset and keep in mind prices can vary slightly between exchanges.
Risk Controls#
Good platforms let you set guardrails. Max position size caps how big any single position can be. Slippage limits prevent execution if price has moved too far. Drawdown limits stop copying if losses hit a threshold. And Limit Account Size caps your max total exposure.
These exist because copy trading is automatic. You need rules to protect yourself when you're not watching.
Why Trades Might Differ#
Your results won't be identical to the trader's. Common reasons include slippage (you got a worse fill), latency (price moved between their entry and yours), fees (you might pay more or less depending on your exchange), funding (depends on when you entered relative to funding periods), and position size rounding (your $487 position might round differently than their $50,000).
Over time, these small differences compound. Expect variation.
Copy trading removes the decision making, but it doesn't remove the mechanics of trading. Understanding what happens behind the scenes helps you set realistic expectations and configure your settings properly.
