What Is Front-Running?
Front-running is stepping in front of someone else's trade. In traditional markets it often means a broker or insider trading ahead of a client order. In crypto it also includes on-chain MEV: bots watch the mempool, see a pending swap, and place their own transaction first (or around it) so they benefit from the price the large trade will move.
How Front-Running Works
On a centralized book, privileged information about a large incoming order can be used to buy or sell before that order hits, then unwind after the price moves. On-chain, a searcher can bid for block position, sandwich a swap by buying before it and selling after, or back-run a transaction that will leave an arbitrage. The original trader usually pays through worse slippage.
Not every short-term trade in front of a move is front-running. The defining feature is acting on knowledge of a specific pending order or transaction, not on public price action alone.
Why It Matters for Traders
If you route large swaps through public mempools, you can be the person who gets sandwiched. On CEXs, the practical lesson is more about information leakage and using limit liquidity instead of advertising size with market orders in a thin book.
How Perps Traders Use This
For on-chain entries, use private routing or tighter slippage limits when size is large enough to move a pool. For CEX perps, avoid turning a planned size into a marketable order that walks the book in one print. Review fills for slippage that looks systematic, not random.
Common Mistakes
- Sending a large DEX swap with a loose slippage tolerance on a public mempool.
- Assuming a CEX is immune because the book is off-chain; information about size can still leak.
- Calling every fast scalp front-running when it was simply public tape reading.
