Copy Trading
A strategy that automatically mirrors the trades of identified profitable traders (whales) in real time.
Definition
Copy trading is a strategy where a bot monitors the trades of other traders (typically large, historically profitable wallets) and automatically replicates their positions at a scaled-down size. The premise is that some market participants have genuine information or analytical edges that manifest as consistently profitable trading patterns.
In practice
The polycopy bot implements copy trading on Polymarket. It uses lib/watcher.js to poll the Data API for trade activity from a curated list of whale wallet addresses. When a whale opens a new position above the configured minimum size, lib/copier.js places a proportionally scaled order on the same outcome token via the CLOB API. The bot maintains position state via lib/state.js and closes copied positions when the whale exits or when the market approaches resolution. The key risks are latency (the bot may copy after the best price has moved), adverse selection (copying a bad trade), and market impact (the bot's copy order moving a thin book against itself).