Building a Polymarket TWAP Bot with Coinbase-Based Risk Management

I've been experimenting with automated trading infrastructure for Polymarket's short-duration crypto markets.

One problem I keep coming back to is risk management.

Finding an entry signal is relatively straightforward. The harder question is:

What happens when the market changes immediately after entering?

The Idea

My bot combines Polymarket market data with a real-time Coinbase price feed.

Polymarket Data
      +
Coinbase BTC Movement
      ↓
Risk Engine
      ↓
HOLD / REDUCE / EXIT

Polymarket provides information such as:

Token price
Order book
Liquidity
Time remaining
Position state

Coinbase provides another view of the underlying crypto market:

BTC price movement
Short-term momentum
Volatility
Rapid price changes

Coinbase isn't being used as a prediction oracle. It's an additional risk signal.

Example

Suppose the bot holds an UP position.

Then BTC suddenly moves sharply lower on Coinbase.

Instead of blindly waiting for the market to finish, the risk engine can reassess:

BTC moves
   ↓
Risk detected
   ↓
Check position + liquidity
   ↓
HOLD / REDUCE / EXIT

The goal is to make the bot continuously evaluate whether the conditions behind the original trade are still valid.

What I'm Working On

The interesting engineering challenge isn't only the trading strategy.

It's everything around it:

Real-time WebSocket data
Risk scoring
Position management
Low-latency execution
Stale-data detection
Partial fills
Liquidity checks
Failure handling

The broader architecture is:

Observe
  ↓
Analyze
  ↓
Enter
  ↓
Monitor
  ↓
Detect Risk
  ↓
Manage Position
  ↓
Exit

I'm continuing to experiment with this approach and improve the trading infrastructure.

Project

GitHub: Polymarket Trading Bot Python V2

Telegram: @BenjaminCup

If you're building trading bots, Web3 infrastructure, or real-time market systems, I'd be interested in hearing how you're approaching risk management.

Educational/research project. Automated trading involves significant risk and does not guarantee profits.