Best Polymarket Trading Strategies

1. Directional Trading

The simplest and most popular strategy. You analyse the market and take a directional bet on whether the price will be above or below a certain level at resolution.

How It Works

Look at the current crypto price and the market's strike price. If BTC is at $99,800 and the market asks "Will BTC close above $100,000 in 15 minutes?", you need to decide: will BTC rise $200 in the next 15 minutes?

• Buy YES — If you believe the price will be above the strike at resolution. Best when the YES price is low (high potential return).
• Buy NO — If you believe the price will be below the strike. Best when the NO price is low.

Best For

Traders with experience reading crypto charts and understanding short-term momentum. Works well with 15-minute markets where you can react to breaking news or technical setups.

2. Mean Reversion (RSI Strategy)

Mean reversion strategies bet that prices tend to return to their average after extreme moves. Using the RSI (Relative Strength Index) indicator, you can identify when a market is overbought or oversold.

The Setup

1. 1
   Monitor RSI on the underlying crypto

   When RSI drops below 30, the asset is considered oversold — it may bounce back up.

2. 2
   Buy YES when RSI is oversold

   If RSI is below 30 and the YES price is cheap, buy YES shares expecting a price recovery.

3. 3
   Buy NO when RSI is overbought

   When RSI rises above 70, the asset may be due for a pullback. Buy NO shares.

4. 4
   Exit on mean reversion

   Close your position when RSI returns to the 40-60 neutral zone, or hold until resolution.

3. Momentum Trading

Momentum strategies ride the trend. Instead of betting on reversals, you bet that the current direction will continue.

Using MACD

The MACD (Moving Average Convergence Divergence) indicator is ideal for momentum strategies on prediction markets:

• MACD crosses above signal line — Bullish momentum — buy YES shares on "price above" markets.
• MACD crosses below signal line — Bearish momentum — buy NO shares or buy YES on "price below" markets.
• MACD histogram expanding — Momentum is strengthening — increase position size.
• MACD histogram contracting — Momentum is fading — consider taking profits.

4. Spread Arbitrage

This is one of the lowest-risk strategies in prediction markets. When the combined price of YES + NO shares is less than $1.00, you can buy both sides for a guaranteed profit at resolution.

How It Works

In a perfectly efficient market, YES + NO should always equal $1.00. But in practice, spreads create opportunities:

• YES at $0.47 + NO at $0.48 = $0.95 — Buy both for $0.95. At resolution, one pays $1.00. Guaranteed $0.05 profit (5.3% return).
• Works regardless of outcome — It doesn't matter whether YES or NO wins — you always collect $1.00 on one side.
• Scales with capital — The more you can deploy, the more you earn. Low risk per trade but consistent returns.

5. Market Making

Market making involves providing liquidity to both sides of the orderbook and earning the spread between your buy and sell prices.

The Approach

1. 1
   Place limit orders on both sides

   Post a buy order slightly below the mid-price and a sell order slightly above.

2. 2
   Earn the spread

   When both orders fill, you've bought low and sold high. The spread is your profit.

3. 3
   Manage inventory

   If you accumulate too many shares on one side, adjust your prices to rebalance.

6. Automated AI Strategies

Polyblock's Playground lets you combine any of the above strategies into automated bots that trade 24/7:

The best part: you don't need to code any of this. Describe your strategy to the Playground AI assistant in plain English and it builds the configuration for you.

Risk Management for All Strategies

No matter which strategy you choose, proper risk management is essential:

1. 1
   Position sizing

   Never risk more than 5-10% of your total balance on a single trade. Even the best strategies have losing streaks.

2. 2
   Diversification

   Spread your capital across multiple markets and strategies. Don't put everything on one BTC trade.

3. 3
   Defined risk

   Prediction markets have built-in max loss (the price you paid). But still set daily loss limits to protect your bankroll.

4. 4
   Paper trading first

   Use Polyblock's Paper Zone to test strategies with virtual funds before risking real money.

5. 5
   Track everything

   Review your trade history regularly. Identify which strategies and markets are most profitable for you.

Choosing the Right Strategy

The best strategy depends on your experience level, risk tolerance, and available time: