Prediction Markets Series (1): Building a Polymarket Copy-Trading Bot from Scratch

⚠️ Disclaimer: This article explores technical implementation only. This is not financial advice. DYOR.

Prediction markets are mooning right now, so I started digging into Polymarket. I'm sharing my alpha here.

As developers, the best way to participate isn't to "gamble" on the outcome, but to build the tools.

Let's build a simple copy-trading bot for Polymarket.

Why? Because a copy-bot is the perfect "Engineering Dojo":

1. Simple Logic: No complex probability modeling needed. Just watch the "Smart Money" wallets.
2. Full Coverage: API interaction, signatures, order book matching, slippage control... you touch all the quant trading infra basics.

This article uses the Polymarket Official API to design and build a bot from scratch. WAGMI.

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🏗️ Architecture: Minimalism

Entities should not be multiplied beyond necessity. The core loop is:

1. Listen: Poll the target address for activity.
2. Decide: Should we copy? How much?
3. Execute: Fire the order via API.

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🕵️ Step 1: Listen

First, we need to know what the target whale is doing. Polymarket provides a Data API for this.
While Websockets exist, for a simple bot, Polling is robust and easier to debug.

Core Endpoint: Activity

We care about /activity.

// Example: Get latest activity for a wallet
const DATA_API_URL = 'https://data-api.polymarket.com/activity';

async function fetchLatestActivity(walletAddress: string) {
    const params = new URLSearchParams({
        user: walletAddress,
        limit: '20',
        sortBy: 'timestamp',
        sortDirection: 'desc'
    });

    const response = await fetch(`${DATA_API_URL}?${params}`);
    const data = await response.json();
    return data;
}

💡 Engineering Note: Deduplication

APIs can be flaky. You don't want to copy the same trade twice because of a network retry. Best Practice: Always use transactionHash as a unique key. Maintain a Set<string> in memory to track processed hashes.

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⚡ Step 2: Execute

Once we see the target bought "Trump Win", we need to hit the CLOB (Central Limit Order Book).

Polymarket has a great TypeScript SDK: @polymarket/clob-client. Use it. Don't hand-roll signatures unless you enjoy pain.

Core Action: Order

Speed is key. We use FAK (Fill-And-Kill) market orders. We want liquidity NOW.

import { ClobClient, Side, OrderType } from '@polymarket/clob-client';

async function followTrade(client: ClobClient, tokenId: string, amount: number) {
    // 1. Create Order Structure
    const order = await client.createMarketOrder({
        tokenID: tokenId,
        amount: amount,
        side: Side.BUY,  // or Side.SELL
    });

    // 2. Sign and Send
    const response = await client.postOrder(order, OrderType.FAK);
    console.log('Trade Result:', response);
}

💡 Engineering Note: Slippage Protection

The whale buys at $0.50. By the time your bot wakes up, bots might have pushed it to $0.60. Always check the Orderbook first.

// Pseudo-code: Slippage Check
const book = await client.getOrderBook(tokenId);
const bestAsk = book.asks[0].price;

if (Math.abs(bestAsk - targetPrice) / targetPrice > MAX_SLIPPAGE) {
    console.warn("⚠️ Slippage too high, aborting.");
    return;
}

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🕳️ The "Gotchas"

1. Proxy Wallets

Polymarket uses Proxy Wallets for gas-less trading.

• Frontend Address: The Proxy.
• Your Key: Controls the EOA (Externally Owned Account) that controls the Proxy.
• Code: When initializing the SDK, know your SIGNATURE_TYPE. Metamask keys usually need EOA mode.

2. "Sell" vs "Redeem"

Two ways to exit:

• Sell: Selling the token to someone else.
• Redeem: If the event ended, or you hold both Yes and No (a complete set), you Redeem, you don't Sell. Your bot needs to handle both.

3. API Rate Limits

Don't spam. Cloudflare will ban you. If you monitor many addresses, use a proxy pool or rate-limit your fetch calls.

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📦 Summary

Writing the bot is easy. Handling edge cases is hard.
Start with an MVP using the SDK. Then optimize for Slippage, Gas, and Capital Efficiency.

Happy Coding! 🐳

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🔗 Resources

• Polymarket API Docs
• CLOB Client SDK