How Traders Are Building Real-Time Momentum Strategies on Polymarket in 2026
Researchers and traders are exploring whether rapid probability spikes on Polymarket's crypto Up/Down markets can signal genuine trading opportunities or merely reflect temporary order-book pressure. The core challenge is that Polymarket prices represent resolution probabilities, not spot prices, and some markets settle against Chainlink-generated TWAP data rather than conventional exchange prices. A proposed spike-detection framework combines short-term probability momentum, order-book imbalance, and external crypto asset returns into a single composite score. Rather than issuing simple buy or sell signals, the approach classifies each spike into one of three states: information-backed, book-driven, or resolution-disconnected momentum. Polymarket's public WebSocket API enables event-level data collection, making this kind of granular, real-time research technically feasible.
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