Polymarket Trading Bot :Market Maker - How to Backtest Strategies and Optimize Trading Parameters
Day 9 — Building a Python backtesting framework to simulate order execution, measure performance, and optimize market-making strategies. Introduction In the previous article, we built an adaptive market-making strategy that adjusts its spreads based on volatility, liquidity, and inventory. But an important question remains: How do we know whether our strategy actually works? Imagine your…
Backtesting is a crucial step in evaluating a trading strategy before deploying it in live markets. By simulating the strategy against historical data, traders can analyze performance metrics and optimize parameters without risking real funds. This process helps identify potential issues such as order execution problems, market impact, and trading costs that may not be apparent in backtesting.
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