Risk Disclosure

1. Prediction Market Risks

Prediction markets are inherently volatile and speculative. Key risks include:

• Binary outcomes: Positions resolve to either full value or zero. Unlike traditional markets, there is no middle ground -- you either win your position or lose it entirely.
• Liquidity risk: Some markets may have thin order books, making it difficult to enter or exit positions at desired prices. Large orders may experience significant slippage.
• Resolution risk: Markets may resolve in unexpected ways. Resolution criteria, timing, and edge cases may not align with your expectations.
• Platform risk: Polymarket is a third-party platform. Changes to its rules, availability, or policies may affect your positions. PolySpy has no control over Polymarket's operations.
• Regulatory risk: The regulatory environment for prediction markets is evolving. Changes in law or regulation could restrict or prohibit prediction market trading in your jurisdiction.

2. Copy Trading Risks

• A trader who has been profitable historically may experience significant losses in the future. Market conditions change, and past success does not guarantee continued success.
• The wallets you copy may have different risk tolerances, portfolio sizes, and time horizons than yours. A position that represents 1% of a whale's portfolio could represent a much larger proportion of yours.
• You will typically enter trades after the wallet you are copying, meaning you may receive worse prices due to market impact from their order.
• Wallets on leaderboards may have survived through luck rather than skill (survivorship bias). The leaderboard only shows winners, not the many wallets that lost capital.
• A wallet's public activity may not reflect their full strategy. They may hedge positions through other wallets or platforms that you cannot see.

3. Fade Trading Risks

• Taking the opposite side of a trade assumes the original trader is wrong. If the trader has genuine informational advantage or skill, fading them will result in consistent losses.
• Fresh wallets that appear to be "dumb money" may actually be sophisticated traders using new addresses to mask their activity.
• Fade strategies can experience sudden, large losses when the market moves strongly in the direction of the trader you are fading.
• The statistical edge of fading certain wallet types can deteriorate over time as market dynamics change or as more participants adopt similar strategies.

4. Automated Execution Risks

• Slippage: The price at which your order executes may differ from the price at the time the signal was generated, especially in fast-moving or illiquid markets.
• Technical failures: Software bugs, server outages, network issues, or API rate limits can cause trades to fail, execute late, or execute incorrectly. PolySpy cannot guarantee 100% uptime or flawless execution.
• API issues: The Polymarket API may be unavailable, rate-limited, or return errors. Orders may be rejected, partially filled, or delayed. PolySpy depends on third-party APIs and cannot control their reliability.
• Cascading errors: A single erroneous signal or misconfigured strategy could trigger multiple unwanted trades before you are able to intervene. Always configure appropriate position limits and risk controls.
• Stale signals: Delays between signal detection and trade execution may render the original trading thesis invalid by the time the order is placed.

5. Backtesting Limitations

• Backtests use historical data and assume past conditions will repeat. Markets evolve, and conditions that produced past results may never recur.
• Backtests may not accurately model real-world execution conditions including slippage, partial fills, order book depth, and latency.
• Survivorship bias: Historical data may overrepresent successful wallets and underrepresent wallets that lost capital and became inactive.
• Look-ahead bias: Despite our best efforts, backtesting systems can inadvertently use future information to make past decisions, producing artificially favorable results.
• Data quality: Historical data may contain gaps, errors, or inconsistencies that affect backtest accuracy.
• Overfitting: A strategy optimized to perform well on historical data may perform poorly in live markets. Be cautious of strategies with many parameters tuned to past data.

6. Capital at Risk

7. Not Financial Advice

8. Regulatory Considerations

The regulatory landscape for prediction markets varies by jurisdiction and is subject to change. You are solely responsible for understanding and complying with all applicable laws and regulations in your jurisdiction, including but not limited to:

• Whether prediction market trading is legal in your jurisdiction.
• Any licensing or registration requirements that may apply to your trading activity.
• Tax reporting obligations on prediction market gains or losses.
• Any restrictions on the use of automated trading tools or copy-trading services.

PolySpy does not provide legal or regulatory advice. If you are unsure about the legal status of prediction market trading in your jurisdiction, consult with a qualified legal professional before using the Service.

9. Contact

If you have any questions about the risks described in this document, please contact us at support@polyspy.app.