Building a Production Polymarket Trading Bot: Lessons from 4 Strategies

Short summary

A developer shares lessons from building four Polymarket trading bots, from a -37% directional loss to a current arbitrage engine using Bregman divergence and Frank-Wolfe optimization. The core insight: directional bets lack genuine alpha and paper-trading accuracy matters—using bid vs. ask prices caused phantom profits to vanish in production. Production arbitrage strategies grounded in convex optimization and strict execution guardrails provide theoretically provable edge.

• •Directional bets fail without genuine alpha; arbitrage strategies grounded in convex optimization offer provable edge
• •Paper trading must simulate real slippage and bid-ask spreads or it creates phantom profits that vanish in production
• •Modular bot architecture with execution guardrails (0.5% minimum profit, VWAP validation, position limits) enables faster iteration

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