How a TWAP-Aware Architecture Makes Smarter Polymarket Trading Bots

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A conventional trading engine can predict price direction correctly and still lose on Polymarket because settlement values are based on time-weighted average prices, not the latest tick. Developer Soulcrancerdev explains that a TWAP-aware bot must process price observations through time alignment and an average-state estimate before comparing against market probabilities. A key architectural insight is that a late sharp price move carries less weight than it appears to, since earlier observations still contribute to the final averaged settlement figure. The post also warns that using source timestamps as immediate trade signals in backtesting introduces look-ahead bias, skewing research results. Polymarket's CLOB API supports real-time order book and WebSocket data, enabling engineers to build a full measurement loop from external observation through to realized market movement.

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