Polymarket Auto-Trader

Fully autonomous prediction market trading agent for Polymarket. Evaluates markets using LLM probability estimation, sizes positions with Kelly criterion, and executes trades via the Polymarket CLOB API from a non-US VPS.

Prerequisites

• Non-US VPS — Polymarket blocks US IPs. Use DigitalOcean Amsterdam, Hetzner EU, etc.
• Polygon wallet with USDC.e (bridged USDC, NOT native USDC)
• MATIC for gas (~0.1 MATIC sufficient for hundreds of trades)
• Anthropic API key (uses Haiku at ~$0.001/evaluation)

Setup

1. VPS Environment

SSH into your non-US VPS and run:

python3 {baseDir}/scripts/setup_vps.sh

Or manually:

apt update && apt install -y python3 python3-venv
python3 -m venv /opt/trader
/opt/trader/bin/pip install py-clob-client python-dotenv web3 requests

2. Configuration

Create /opt/trader/app/.env:

PRIVATE_KEY=<your-polygon-wallet-private-key>
LLM_API_KEY=<your-anthropic-api-key>

3. Blockchain Approvals

Before trading, approve USDC.e and CTF tokens for Polymarket contracts. Run:

python3 {baseDir}/scripts/approve_contracts.py

Required approvals (6 total):

• USDC.e → CTF Exchange, Neg Risk Exchange, Neg Risk Adapter
• CTF → CTF Exchange, Neg Risk Exchange, Neg Risk Adapter

4. Deploy Trading Script

cp {baseDir}/scripts/run_trade.py /opt/trader/app/
cp {baseDir}/scripts/pnl_tracker.py /opt/trader/app/

5. Cron Automation

crontab -e
# Add: */10 * * * * cd /opt/trader/app && /opt/trader/bin/python3 run_trade.py >> cron.log 2>&1

How It Works

1. Market Scan — Fetches active markets from Gamma API, filters by liquidity and time horizon
2. LLM Evaluation — Asks Claude Haiku to estimate true probability for each market
3. Edge Detection — Compares LLM fair value vs market price (min 5% edge threshold)
4. Kelly Sizing — Half-Kelly criterion with 25% max position size cap
5. Order Execution — Places limit orders via CLOB API with GTC (good-till-cancelled)
6. Dedup — Tracks all trades in trades.jsonl, skips already-traded markets
7. Budget Control — Tracks LLM inference costs separately from trading capital

Trading Parameters

Configurable in run_trade.py:

• EDGE_THRESHOLD — Minimum edge to trade (default: 0.05 = 5%)
• MIN_SHARES — Minimum order size (Polymarket requires ≥5 shares)
• Bankroll allocation: 80% usable, 25% max per trade, 30% cap per single position
• Market horizon: Prioritizes markets ending within 30 days

Monitoring

Check P&L anytime:

python3 /opt/trader/app/pnl_tracker.py

Check recent activity:

tail -50 /opt/trader/app/cron.log

Key Technical Details