How Polymarket Bots Can Misread Order-Book Imbalance as a Trading Signal
A technical analysis published on DEV Community examines why order-book imbalance is an unreliable standalone signal for Polymarket trading bots. The standard imbalance formula compares total bid and ask volumes on a scale of -1 to +1, but a high reading can vanish within milliseconds due to order cancellations, new liquidity, or trades consuming one side of the book. The author argues that bots should measure not just the current imbalance value but how long a meaningful imbalance persists over time, treating persistence as a key qualifier. Choosing how many order-book levels to include also matters, since distant price levels can skew calculations while having little bearing on actual execution prices. The piece recommends combining imbalance data with trade flow, spread, and liquidity metrics before a bot acts on any apparent market pressure.
This is an AI-generated summary. ShortSingh links to the original source for the complete article.
Discussion (0)
Log in to join the discussion and vote.
Log in