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Common Backtesting Mistakes in Prediction Markets

Frequent mistakes

• Filling at mid-price instead of walking real depth
• Ignoring resolution — testing entries/exits without checking the actual outcome
• Surviorship bias from only backtesting markets that had enough volume to notice
• Not accounting for spread widening near resolution

Related

• Why mid-price backtests lie
• Data cleaning for prediction market backtests

Related guides

• Prediction Market Data for Academic Research
• Building a Polymarket Backtesting Framework in Python
• Data Cleaning for Prediction Market Backtests
• Execution Simulation With Prediction Market Data

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