Paper Trading Prediction Markets: Test Before You Risk Capital

The fastest way to lose money on prediction markets is to run an untested strategy with real capital. Paper trading fixes that: you run the exact same code against live market data, but fills are simulated, so you learn whether an idea actually works before a single real dollar is at stake.

Why paper-first matters more here

• Binary contracts resolve to 0 or 1, so a strategy that looks fine on average can still be ruined by a few bad resolutions. Paper trading surfaces that.
• Liquidity and slippage on event contracts are not the same as equities. You want to see real fills, not a backtest fantasy.
• Automation amplifies mistakes. A logic bug that places one bad order by hand can place a hundred when automated.

Paper trade against the real book, not a simulation

Backtests are useful, but they cannot capture live order-book dynamics. Banger paper-trades against the live Polymarket and Kalshi books: your strategy sees real ticks and gets simulated fills at real prices, so the gap between paper and live is as small as possible.

pip install bangertrades
banger run my_strategy.py --paper

Promote the same code, unchanged

The point of paper-first is that nothing changes when you go live except the flag. The strategy you tested is the strategy that trades. Add your venue keys, keep the risk envelope, and flip from paper to live when the evidence is good enough. That is how you build conviction without gambling to get it.