Prediction markets reward speed and precision. Here’s a concise, technically deep guide to building a production-grade Polymarket prediction bot.
1. Project Setup & Data Layer
npm init -y
npm install viem @polymarket/sdk graphql graphql-request ws redis
- Use viem for fast Polygon contract interaction (Conditional Tokens)
- Subscribe to Polymarket CLOB WebSocket for real-time order book and price updates
- Maintain a local order book state (don’t rely only on best_bid_ask)
2. Probability Engine (The Real Edge)
const edge = modelProb - marketProb - fees;
if (edge > 0.06 && liquidity > threshold && timeLeft < 120) {
executeTrade();
}
Key Components:
- Time-decay weighting: weight = Math.log(remainingSeconds + 1)
- Ensemble model: XGBoost + Bayesian updating + LLM sentiment analysis
- Features: implied probability, short-term momentum, cross-market correlations, historical resolution baseline
3. Execution Layer
- Direct smart contract calls via viem
- IOC (Immediate-Or-Cancel) orders with pre-execution best-ask validation
- Dynamic position sizing using fractional Kelly Criterion
4. Risk & Production Safeguards
- Daily drawdown limit: -7%
- Per-market exposure cap: ≤2% of bankroll
- Volatility-based circuit breaker
- Full audit logging + Redis position tracking
The biggest edge comes from low-latency infrastructure + strict risk management, not overly complex models.
If you have more questions, please feel free to contact me at any time: https://t.me/NevoSayNev0
Tags: #Polymarket #TradingBots #PredictionMarkets #DeFi #Web3 #AlgorithmicTrading #QuantitativeTrading #Fintech #TypeScript #AI
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