Trading Strategies

Polystrike provides three independent lag signals that each represent a different trading opportunity. This guide explains how to use them.

Caution

These strategies describe information edges, not guaranteed profits. Prediction markets involve risk. Always size positions appropriately and never risk more than you can afford to lose.

Strategy 1: Display Delta Front-Running

Signal: display_delta is large (e.g., > 5)

What’s happening: The Polymarket UI counter is frozen or lagging. Most traders are looking at a stale number.

The edge: If the UI shows 240 tweets but the real count is 248, traders in the 240-259 bucket think they’re safe. But the count is closer to busting that bucket than they realize.

How to use it:

1. Monitor display_delta via GET /meta/elon
2. When display_delta > 5, check which bucket the UI count suggests vs. where the real count is heading
3. If the real count is near a bucket boundary that the UI doesn’t reflect, the market is likely mispriced

When it fails: The UI can catch up suddenly, and other sophisticated traders may already be exploiting the same lag.

Strategy 2: Settlement Delta Arbitrage

Signal: settlement_delta is positive

What’s happening: Polystrike has counted tweets (including deleted ones) that XTracker hasn’t picked up yet.

The edge: The settlement oracle will eventually catch up to the real count. If that catch-up moves the count across a bucket boundary, the affected bucket’s price should move.

How to use it:

1. Monitor settlement_delta via GET /meta/elon
2. Calculate where the count will land once XTracker updates
3. If the XTracker update would push the count into a different bucket, trade accordingly before the update

Important caveat: Deleted tweets create a persistent gap. If settlement_delta is driven by deletions (tweets we captured but XTracker never saw), the oracle may never “catch up” for those specific tweets. Check the tweet feed for is_deleted flags to distinguish real lag from deletion-driven divergence.

Strategy 3: Prediction-Based Positioning

Signal: Monte Carlo predictions show high probability for a specific bucket

What’s happening: The model projects where the final count will land based on current velocity and sleep patterns.

The edge: When the model assigns > 70% probability to a bucket but the Polymarket price for that bucket is only 50-60%, there’s a potential expected value (EV) edge.

How to use it:

1. Call GET /prediction/elon (Pro tier) to get bucket probabilities
2. Compare model_prob to market_price for each bucket
3. The edge field gives you the raw difference: model_prob - market_price
4. The signal field provides a pre-computed recommendation (STRONG_BUY, BUY, HOLD, SELL)

When to trust the model:

• Final 16 hours: Highest reliability. The count trajectory is well-established.
• 16-36 hours: Moderate. Check the sleep_probability field — if Elon is likely asleep, the model can project confidently.
• More than 36 hours: Low reliability. Early predictions overestimate by 15-20%.

Position Sizing with Kelly Criterion

The /signals/elon endpoint (Pro tier) provides EV-based signals with Kelly Criterion sizing. Pass ?bankroll=100 to get suggested_bet sized to your bankroll:

Field	What it tells you
ev	Expected value of a $1 bet. Positive = profitable in expectation.
kelly_fraction	Optimal fraction of bankroll to bet (Kelly Criterion).
suggested_bet	Dollar amount to bet, calculated as kelly_fraction * bankroll. Pass ?bankroll= to customize.
confidence	HIGH, MEDIUM, or LOW based on time remaining and model certainty.
moneyness	How deep the p50 is inside the bucket. Higher = safer.

Tip

Kelly Criterion gives the mathematically optimal bet size, but most traders use “fractional Kelly” (betting 25-50% of the suggested amount) to reduce variance.

When NOT to Trade

Polystrike signals also help you avoid bad trades:

• confidence: LOW: Not enough data or too much time remaining. Wait.
• moneyness near 0: The p50 is right at a bucket boundary. High risk of the count landing on either side.
• ev negative: The market has already priced in the edge. No trade.
• signal: SKIP: The system explicitly recommends no action.
• p5-p95 spans 3+ buckets: Too much uncertainty to make a confident bet.