Build a Polymarket Trading Bot
An AI that monitors prediction markets, analyzes events, and executes trades based on your strategy while you focus on your day job.
What You'll Build
An AI trading bot that monitors Polymarket prediction markets, analyzes news and sentiment in real-time, and executes trades based on your predefined strategy. It watches the markets so you don't have to.
Why Prediction Markets
Prediction markets are uniquely suited to AI trading because:
- Information edge: AI can process news, social media, and data faster than any human
- Binary outcomes: Most markets are yes/no, making analysis simpler
- Mispricing is common: Markets often lag behind breaking news by minutes to hours
- Lower stakes: You can start with $50 to test your strategy
Prerequisites
- OpenClaw running on your machine
- Polymarket account with funds
- API access (Polymarket's API or browser automation)
- A news/data source for the markets you want to trade
Step 1: Define Your Strategy
Don't let your AI trade randomly. Define clear rules:
"Monitor political markets. When a major news event directly impacts a market and the price hasn't moved yet, buy if confidence > 70%. Max position: $100 per market. Take profit at 15% gain. Stop loss at 20%."
The more specific your rules, the better your AI performs.
Step 2: Set Up Market Monitoring
Your AI watches specific markets or categories. For each:
- Track the current price
- Monitor relevant news sources (Twitter, Reuters, AP, etc.)
- Detect significant events that could move the market
- Calculate whether current pricing reflects the new information
Step 3: Analysis and Signal Generation
When your AI detects a potential trade:
- Cross-reference the event across multiple sources (avoid fake news)
- Estimate the probability shift
- Compare to current market price
- Generate a confidence score
- Check against your risk rules
Step 4: Execution
If a trade passes all checks:
- Place the order at the target price
- Set up monitoring for exit conditions
- Log everything (entry price, reasoning, confidence, sources)
- Notify you of the trade
Step 5: Portfolio Management
Your AI also handles the boring stuff:
- Track all open positions
- Monitor for exit signals (profit target, stop loss, time decay)
- Rebalance if one position gets too large
- Generate daily P&L summaries
Risk Management Rules (Non-Negotiable)
- Max position size: Never risk more than X% of your total capital on one market
- Daily loss limit: Stop trading if you lose more than Y% in a day
- Correlation check: Don't overload on related markets
- Human override: You can pause all trading with one message
Tips
- Start paper trading: Run the bot for 2 weeks with fake money before going live
- Specialize: An AI that's great at political markets is better than one that's mediocre at everything
- Speed matters: The edge is in reacting to news faster than the market. Make sure your news sources are fast
- Log everything: You'll want to analyze what worked and what didn't
Caution
Trading involves real money and real risk. Start small. Never invest more than you can afford to lose. Past performance doesn't predict future results. Your AI is only as good as your strategy.