Polymarket Trading Bot

Automated trading bot for Polymarket prediction markets. Supports 4 strategies, optional AI integration, and full risk management.

Strategies

1. Market Making (STRATEGY=market-maker)

Places two-sided bid/ask quotes around a computed fair value. Profits from the spread when both sides fill. Optionally uses AI (Claude/GPT) to tilt the midpoint based on event analysis.

2. Momentum (STRATEGY=momentum)

Tracks price over a rolling window. When price moves sharply in one direction (news, event catalyst), enters in the same direction and rides the trend. Exits on take-profit or stop-loss. Works best on markets with breaking news flow.

3. Mean Reversion (STRATEGY=mean-reversion)

Maintains an EMA of price and a rolling standard deviation. When price deviates beyond N standard deviations from the EMA, bets on reversion back to the mean. Exits when price returns within a tighter band. Works best on stable-consensus markets with no new information.

4. Copy Trading (STRATEGY=copy-trade)

Monitors one or more target wallets (from the Polymarket leaderboard or anywhere) via the public Data API. When a target makes a trade, replicates it with configurable sizing and delay. No market scanning needed — just follows the targets.

Architecture

src/
├── index.ts                    # Entry point
├── setup.ts                    # Credential derivation & connectivity test
├── config/index.ts             # Config loader (all strategies)
├── types/index.ts              # Full type definitions
├── ai/
│   ├── anthropic.ts            # Claude API
│   ├── openai.ts               # GPT API
│   └── router.ts               # Provider selection (supports "none" mode)
├── strategies/
│   ├── market-maker.ts         # Spread quoting with layered orders
│   ├── momentum.ts             # Trend-following with entry/exit signals
│   ├── mean-reversion.ts       # EMA + z-score based fade strategy
│   ├── copy-trader.ts          # Wallet monitoring + trade replication
│   └── scanner.ts              # Market discovery & ranking
├── services/
│   ├── polymarket.ts           # CLOB client wrapper
│   ├── risk.ts                 # Exposure, PnL, drawdown tracking
│   └── bot.ts                  # Orchestrator (routes to active strategy)
└── utils/
    ├── logger.ts
    └── helpers.ts

Setup

npm install
cp .env.example .env
# Edit .env: set PRIVATE_KEY, FUNDER_ADDRESS, STRATEGY, and strategy-specific params

# Test connectivity (derives CLOB API creds)
npm run setup

# Run
npm run dev

AI is optional

Set AI_PROVIDER=none (the default) to run any strategy without AI. The market maker will use pure order-book-derived midpoints. Momentum and mean reversion don't use AI at all. Copy trading doesn't use AI at all.

If you want AI-assisted market making, set AI_PROVIDER=anthropic or openai or fallback and provide the corresponding API key.

Copy Trading Setup

1. Find wallet addresses on the Polymarket leaderboard
2. Set them in .env:

   STRATEGY=copy-trade
   COPY_TARGETS=0xabc123...,0xdef456...
   COPY_SIZE_MULTIPLIER=0.5
   COPY_MAX_SIZE_USD=25
   

3. The bot polls the Data API every COPY_POLL_INTERVAL_SEC seconds for new trades from those wallets
4. First poll marks existing trades — it won't retroactively copy the target's history

Key Config

Parameter	Default	Strategies	Description
STRATEGY	market-maker	all	Which strategy to run
AI_PROVIDER	none	market-maker	none, anthropic, openai, fallback
SPREAD	0.02	market-maker	Bid-ask spread width
ORDER_SIZE	10	all	USDC per order
MOMENTUM_THRESHOLD	0.03	momentum	Min price move to trigger
MEAN_REVERSION_BAND	1.5	mean-reversion	Z-score entry threshold
COPY_TARGETS	(empty)	copy-trade	Comma-separated wallet addresses
COPY_SIZE_MULTIPLIER	0.5	copy-trade	Your size relative to target
MAX_DRAWDOWN	200	all	USDC loss before full shutdown

Risk Management

Applies to all strategies:

• Per-market loss cap → stops quoting that market
• Total drawdown cap → cancels everything, pauses
• Exposure cap → no new orders
• Inventory skew → tilts quotes to offload (market-maker only)

Warnings

• Real money. Start with tiny sizes ($1-2) and low exposure caps.
• Market making in prediction markets is risky — markets can resolve 0 or 1 and wipe your inventory.
• Copy trading adds latency — the target gets better prices than you.
• The bot requires token allowances set on Polygon for the CTF Exchange before placing orders.
• Polymarket cancels all open orders when your session goes inactive — the bot must run continuously.