How to Start Polymarket Arbitrage in 2026

This is the guide for someone starting from zero. You've heard about merge arbitrage on Polymarket, you understand the concept, and you want to actually do it. Here's the complete setup process from scratch.

Prerequisites: a computer, $50+ in cash you can convert to USDC, and about 2 hours to set everything up the first time.

What You're Building

The goal is to have: a Polymarket account → connected to a Polygon wallet → funded with USDC → able to scan for YES + NO gaps → execute merge arb trades.

Manual first. Automated later. This guide covers manual execution.

Step 1: Set Up Your Wallet

Step 2: Find Your First Opportunity

import requests

def scan_arb(min_profit=0.003):
    markets = requests.get(
        "https://gamma-api.polymarket.com/markets",
        params={"active": True, "limit": 200, "order": "volume", "ascending": False}
    ).json()

    results = []
    for m in markets:
        yes = float(m.get("bestAsk") or 1)
        no = 1 - float(m.get("bestBid") or 1)
        profit = 1.0 - (yes + no)
        if profit >= min_profit:
            results.append({
                "question": m["question"][:60],
                "yes": yes, "no": no,
                "profit": profit,
                "id": m.get("conditionId", "")
            })

    results.sort(key=lambda x: -x["profit"])
    for r in results:
        print(f"+${r['profit']:.4f} | YES=${r['yes']:.3f} NO={r['no']:.3f} | {r['question']}")

scan_arb()

Step 3: Execute Your First Trade

Realistic Expectations

Common Mistakes

• Over-betting — Using too much capital per trade. Use quarter-Kelly. Max 30% of capital per trade.
• Market orders — Using market orders instead of limit orders. Market orders pay taker fees. Limit orders pay zero fees and earn rebates.
• Crypto/sports markets — Targeting these before understanding the fee structure. Start with zero-fee politics markets.
• Forgetting MATIC — Running out of MATIC for gas when you need to execute a merge. Always keep $5+ in MATIC.
• Not reinvesting — Withdrawing profits instead of compounding. The math only works if you let it compound.
• Chasing tiny gaps — A $0.002 gap on a $20 position is $0.04 profit. After gas, you're even. Set a minimum profit threshold of at least $0.10 per trade.

Next Steps

Once you're comfortable with manual execution:

• Set up the Python scanner to run continuously and alert you
• Get your Polymarket API key (from your account settings → API tab)
• Start automating order placement using the CLOB API
• Add mean reversion as a secondary strategy with 15% of capital
• Consider Bot-as-a-Service when you want 24/7 execution without running your own infrastructure