Strategy — MarkEdge

Current Strategy: v1

MarkEdge trades Kalshi BTC price prediction markets using a momentum + spread + technical analysis scoring strategy. It identifies mispriced contracts by cross-referencing Kalshi and Polymarket probabilities, validates signals against BTC price action (trend, volatility, RSI), sizes positions using fractional Kelly criterion within a 5-mode portfolio manager, and auto-tunes parameters based on resolved trade history.

Signal Generation

Each cycle, the bot fetches all active BTC price markets from Kalshi and Polymarket, then scores each market on two axes:

Component	Weight	How it works
Momentum Score	60%	Averages the probability of nearby Kalshi markets (same direction, adjacent price levels). High agreement among neighbors = strong directional signal.
Spread Score	40%	Compares Kalshi probability vs Polymarket for the same market. A large spread suggests mispricing — we trade the side we believe has the true edge.

Final confidence = (0.6 × momentum) + (0.4 × spread)

Only signals with confidence ≥ 65% pass the filter. Min spread required: 5%.

Technical Analysis Layer

After scoring, each signal passes through a live TA filter using real-time BTC price data (hourly candles from Coinbase). This layer rejects bad setups and adjusts confidence based on market conditions.

BTC PRICE

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TREND

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RSI (14)

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ATR (14H)

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EMA 20

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EMA 50

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BB UPPER

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BB LOWER

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Filter / Adjustment	Indicator	Effect
Candle spike	Last candle range > 2× ATR	Skip entire cycle
High volatility	ATR > 5% of price	Skip cycle
Elevated volatility	ATR 3–5% of price	Cap at 1 contract
Trend alignment	EMA20 vs EMA50	+5% confidence boost if signal matches trend
RSI extremes	RSI > 70 or < 30	Warns of overbought/oversold; adjusts sizing
Bollinger bands	Price vs BB upper/lower	Signals near extremes get reduced confidence

Position Sizing — Kelly Criterion

Trade size is determined by fractional Kelly criterion combined with a 5-mode portfolio manager that adapts to weekly performance:

Aggressive

1.5× normal — up >3% week

Normal

1.0× — default mode

Caution

0.6× — down 2–4%

Conservative

0.35× — down 4–8% or 3 losses

Halted

0× — down >8% or 5 losses

Stop-Loss & Risk Controls

Condition	Threshold
Entry > 70¢	Max 15% stop-loss
Entry 60–70¢	Max 20% stop-loss
Entry 50–60¢	Max 25% stop-loss
Entry ≤ 50¢	Max 30% stop-loss
Time decay < 5min to expiry	Tightens to 15%
3 consecutive losses	60 min circuit breaker pause
Down >1% in 30 min	Skip cycle (rolling loss cap)

Strategy & Algorithm