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Dev.to
6/16/2026
Fair Value Sweep Strategy for Polymarket Trading Bot (5-Min Up/Down) – Taker Edge That Exploits CEX Lead

Fair Value Sweep Strategy for Polymarket Trading Bot (5-Min Up/Down) – Taker Edge That Exploits CEX Lead

Short summary

A Fair Value Sweep strategy exploits the ~2.4-second lead that Binance spot data has over Polymarket's on-chain order book in 5-minute Up/Down markets. The bot calculates fair-value probability using realized volatility, identifies stale asks below fair value, executes taker fills, and holds to resolution. After correcting for taker fees and look-ahead bias, the strategy shows marginal to slightly negative expected value in backtests aligned with live paper trading.

  • •Exploits CEX-to-on-chain data lead for stale ask detection in 5-minute prediction markets
  • •Uses realized volatility and normal distribution to compute fair-value probability threshold
  • •Current status: marginal/negative returns after correcting for fees and backtesting artifacts

Generated with AI, which can make mistakes.

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