Market Making

A market maker (MM) provides liquidity by continuously posting bids and asks. By quoting both sides of a market, market makers make it easier for other traders to execute while seeking to earn the spread in exchange for the risks they take. On Polymarket, market makers deepen order books, tighten spreads, support price discovery, and absorb trading flow as market conditions change.

​

Set Up for Market Making

Complete these account-level requirements before quoting a market.

​

Quote and Manage Orders

​

Build Two-Sided Quotes

Market makers maintain bids and asks around their fair value so other traders can execute in either direction. The midpoint describes the current book, but the quoting strategy must determine whether it represents fair value and how much risk to take around it. In a binary market, complementary outcomes provide another way to express the two sides. Buying NO at 0.48, for example, is economically equivalent to selling YES at 0.52. Before submitting a quote, confirm that the market is accepting orders and validate its current minimum price increment and minimum order size. See Market Details for these constraints.

​

Choose Order Types

Choose the order type according to what the strategy needs to accomplish: GTC and GTD are the primary order types for passive market making. Add the post-only option when an order must add liquidity rather than execute immediately. FAK and FOK are the execution types used by market orders for immediate rebalancing.

​

Submit and Maintain Orders

Submit related price levels as a batch to reduce submission latency. Each order is evaluated independently, so check every result rather than treating the batch as a single success or failure. See Place Orders for the complete order workflows. Once submitted, the quotes become orders resting on the book. Orders cannot be edited in place, so changing a quote means canceling the existing order and submitting a replacement:

• Cancel and replace open orders when fair value, inventory, or market constraints change.
• Keep the local book current with real-time market data.
• Monitor fills and order changes through Real-Time Order Updates.
• After reconnecting, fetch open orders and recent trades before resuming the strategy.

​

Manage Inventory

Inventory is the outcome-token exposure accumulated through trading. Every fill changes that exposure and the pUSD or tokens available for new orders, so inventory must be part of every pricing and sizing decision. Buy orders use available pUSD, while sell orders require the corresponding outcome tokens. Splitting pUSD creates a complete set of outcome tokens; merging a complete set returns pUSD; and redeeming a winning position releases its value after resolution. See Manage Positions for these workflows.

​

Inventory Strategies

Multi-outcome events use negative-risk markets, which change how complete sets are created and merged. Account for the market type when planning inventory operations.

​

Best Practices

Use these practices to keep quotes current and limit avoidable execution risk.

​

Quote Management

• Quote both sides — Post bids and asks to provide liquidity in both directions.
• Skew on inventory — Adjust quote prices based on the current position to manage exposure.
• Cancel stale quotes — Pull orders immediately when market conditions change.
• Use GTD for events — Expire quotes before known catalysts to avoid stale exposure.

​

Latency

• Batch orders — Submit related quotes in a single request.
• Use real-time data — Subscribe to market updates instead of polling.

​

Risk Controls

• Set size limits — Check token balances before quoting and do not exceed the available inventory.
• Use price guards — Validate prices against the book midpoint and reject outliers.
• Add a kill switch — Cancel all open orders when errors or position limits require the strategy to stop.
• Monitor fills — Subscribe to real-time order updates to track executions.

​

Programs and Incentives

In addition to the spread captured through executions, qualifying market-making activity may earn incentives through two separate programs. Eligibility, calculations, and payouts differ between the programs. See each program page for its current terms.

​

Support

For market maker onboarding and support, contact support@polymarket.com.