How a Polymarket Arbitrage Bot Actually Works: 5 Strategies Explained

A Polymarket arbitrage bot scans prediction markets for pricing inefficiencies and executes trades to capture the resulting spread. That's the concept in one sentence, but arbitrage on Polymarket isn't one strategy, it's several distinct mechanisms, each exploiting a different kind of mispricing. Here's a breakdown of how each one works, based on an open-source implementation. Intra-market arbitrage is the core mechanic. In a binary Polymarket market, YES and NO token prices should always sum to $1.00. When combined pricing falls below that after fees, buying both outcomes locks in a profit that doesn't depend on which outcome actually happens. Buy YES and NO, merge the tokens into a complete set, redeem for $1.00 per share. This is the closest thing to genuinely risk-free arbitrage available in prediction markets. Combinatorial arbitrage extends the same logic to multi-outcome markets, like price-range or bracket-style markets with three or more possible outcomes. If all outcome prices sum to less than $1.00, buying every outcome and redeeming the complete set captures the deviation as guaranteed profit. Cross-platform arbitrage is different. It compares Polymarket's implied probability against real-time spot prices from exchanges like Binance, and trades on the assumption that Polymarket's pricing will converge toward fair value. This is a directional, convergence bet rather than a locked-in profit, which makes it a fundamentally different risk category from the first two strategies. Endgame arbitrage targets markets approaching resolution, where one outcome sometimes trades above 93% probability. Buying that outcome captures a small but near-certain return in a short, predictable window, capital-efficient specifically because time-to-resolution is short and the range of outcomes is narrow. Momentum and mean-reversion is the one strategy here that isn't arbitrage in the strict sense. It applies standard technical indicators, Z-score, RSI, rate of change, VWAP divergence, to Polymarket's YES/NO price series across 5-minute, 15-minute, and 1-hour timeframes, the same toolkit used in equities and crypto momentum trading, adapted to prediction market price action. Running five strategies in parallel means a single market can generate multiple competing signals simultaneously. A well-built bot scores every signal on a weighted composite, expected profit, confidence, strategy-type priority, urgency, and risk and reward ratio, then executes only the highest-ranked signals per cycle, weighting risk-free strategies like intra-market and combinatorial highest, and directional strategies like cross-platform and momentum lower by design. Worth being precise on risk here. Not everything called Polymarket arbitrage carries the same risk profile. Intra-market and combinatorial arbitrage are structurally close to risk-free if executed correctly, since both outcomes are purchased for guaranteed redemption. Cross-platform and momentum strategies are directional bets that can lose money if the anticipated convergence or reversion doesn't happen. Treating all five as equally safe because they're grouped under one bot erases the actual distinction that makes the first two valuable in the first place. Full strategy code and configuration reference: github.com/casatrick/polymarket-arbitrage-bot-python