There are a number of reasons why your portfolio performance may be different than your leader's. Throughout this article, we will cover the most common reasons why this happens.
1. The leader's "Total Performance" metric is aggregated across all portfolios.
Before we dig into some of the more technical reasons, we should first make sure we are looking at the correct values. On the leader's profile page, the "Total Performance" metric is a 24-hour performance metric that is aggregated across all of their portfolios.
If there is a specific portfolio you want to examine, the individual performances for each portfolio can be found by navigating to the portfolio. The performance in the upper left of the graph will be the performance of that portfolio.
In the above image, we can see the "Total Performance" for this leader is 3.88%. However, if we look at the performance of the "Nomics ML" portfolio, we can see the performance is 12.10%.
2. Minimum trade limits
Every exchange has a set of minimum trading rules that all traders must follow when using the exchange. These rules are not set by Shrimpy, so unfortunately, we don't have any control over how these rules are enforced.
When a trade is attempted that is smaller than the minimum trade limit, the exchange will reject the trade.
As a result, there will be times when a leader trades, but the followers might not be able to make the same trade. This happens most commonly on exchanges with high minimum trade limits or when a follower with a small portfolio value follows a leader with a large portfolio value.
Over time, this can lead to the leader and followers having slightly different allocations. Shrimpy does the best it can to mitigate this issue as much as possible by re-evaluating the entire portfolio every time it tries to execute trades to match the leader.
3. Stop-follow events
At this time, Shrimpy requires every follower to set up a "Stop Follow" trigger. Essentially, this trigger allows followers to set a minimum portfolio value that they would like to hold before Shrimpy stops following the leader.
If a stop-follow is triggered for your portfolio, you will no longer track the changes of your leader and your portfolio will experience different performance results than the leader.
If you start following the leader once again, you will continue to have a different performance until at least the reference time period has passed (for example, if one day passed since you started following again, you will have similar one-day performance, but not similar 7-day performance).
Similarly, you will only have a similar performance for as long as you follow a leader. If you started following a leader 3 days ago, you would not have the same 7-day performance as the leader since you were not following the leader the entire time.
4. Different trades
The most complex reason for having different performance is due to executing trades at different prices than the leader.
Since Shrimpy is not an exchange, we are unable to batch multiple orders to be executed at the same price. Instead, we must rely on the exchange to provide us with information about the available orders on the exchange and strategically place our orders to execute the trades for each customer.
That means if we take an order for one customer at the price of $1.00, that doesn't necessarily mean there will be more orders available at $1.00. As a result, Shrimpy has a complex way of routing orders and using a combination of maker and taker orders to execute everyone's trades as closely as possible to each other.
These measures include:
- Intelligently routing orders through alternative trading pairs
- Using a combination of maker and taker orders to reduce our impact on the market.
- Strategically space out orders over a prolonged period of time if necessary.
Since the crypto market can move quickly, the price of an asset can change from minute to minute. Even these short spans of time can mean a follower receives a different price for a trade than the leader.
However, that's doesn't mean the trade is always worse. The crypto market can easily move in either direction, causing followers to even get better trades than the leader (resulting in higher performance in the long run).
5. Different Fees / High-Frequency Trading
The final reason for getting different performance than your leader is due to receiving different fees than your leader.
Exchanges often provide different fee structures based on the type of trades that are being executed (Maker vs Taker) as well as based on the volume executed by a trader each month. Additionally, some exchanges have tokens, like BNB, that offer discounts and rewards for holding those tokens.
Traders that have lower fees than their followers, due to any of these reasons, are more likely to have higher performance.
This performance increase is compounded for leaders that execute frequent trades. The more frequently the leader trades, the higher the performance difference will be due to these trading fees.
The Shrimpy team is constantly working to improve the trading experience. Our goal is to make all followers have the same performance as their leaders. As we continue to integrate new features, we will continuously monitor the way followers and leaders perform.
If you have any questions or feedback, please don't hesitate to reach out to us at [email protected] or use the support chat system located inside Shrimpy!