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𝗛𝗼𝘄 𝘁𝗼 𝗲𝗮𝗿𝗻 𝗰𝗼𝗻𝘀𝗶𝘀𝘁𝗲𝗻𝘁𝗹𝘆 𝗼𝗻 𝗣𝗼𝗹𝘆𝗺𝗮𝗿𝗸𝗲𝘁 𝗼𝗿 𝘀𝗰𝗮𝗹𝗽𝗶𝗻𝗴 𝗳𝗼𝗿 𝘁𝗵𝗲 𝘀𝗺𝗮𝗹𝗹𝗲𝘀𝘁
I want to share a strategy with you that will let you make money every day on price gaps in the order book
Basically, this is just arbitrage using limit orders
𝗟𝗲𝘁’𝘀 𝗴𝗼 𝘀𝘁𝗲𝗽 𝗯𝘆 𝘀𝘁𝗲𝗽:
Our main task is to find liquid markets with a spread in the order book of more than 3–5 cents per share and place ourselves in the order book on the outcome that is the most likely
This strategy is better suited for people with a smaller bankroll, but that doesn’t mean that if your bankroll is over $1,000 you should close this tweet and scroll on
It all depends on your appetite
I’ll show a few trades with different spreads and different percentages
Main rules for this strategy:
- 𝗟𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗼𝗳 𝘁𝗵𝗲 𝗲𝘃𝗲𝗻𝘁
This is both your enemy and your friend
The more liquid the event is, the smaller the spread, but the faster trades get filled
Less liquid events, on the other hand, will have a bigger spread, but the time between buying a share and selling it becomes longer
We need a golden middle ground
- 𝗘𝘅𝗽𝗶𝗿𝗮𝘁𝗶𝗼𝗻 𝗱𝗮𝘁𝗲
Ideally, look for markets with an expiration date more than 3 days away. This gives you time for your limit order to fill on the buy side, and time to sell your limit order as well
- 𝗦𝗽𝗿𝗲𝗮𝗱
I look for markets with at least a 3–5 cent spread per share
- 𝗕𝗲𝘁 𝗼𝗻 𝘁𝗵𝗲 𝗹𝗶𝗸𝗲𝗹𝘆 𝗼𝘂𝘁𝗰𝗼𝗺𝗲
Example: polymarket.com/event/up-only-…
The spread on this event is 8 cents, and if you remove the first limit buy order on NO, then it’s a full 20 cents
The probability of the NO outcome is 84%
Vol is $129k
So we place a limit buy order on NO and simply wait for it to get filled
As soon as the limit order is filled, we list the shares for sale with a limit order as well, using the 8 cent spread
The second example is even more liquid
polymarket.com/event/how-much…
The volume here is even higher
The spread is from 13 to 18 cents per share
There is some uncertainty on this market right now, but thanks to the higher volume we can catch the spread quickly and exit the event fast
To search for events, you can use any trading terminal, I use @StandDOTtrade
In the Discover tab, we set the filter for spreads from 3 to 5 cents, as shown in the screenshot
Are you ready to catch the juiciest spreads?
This isn’t the first time I’ve mentioned this strategy, but now I’ve made a full breakdown of it
If you want to dive even deeper and see my profitable screenshots, I’ll leave links to my articles under this tweet. In those articles I show everything using my own examples
If this tweet was useful to you, make sure to leave your thoughts - It really means a lot to me
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