3.13 Breakout-Follower

1. Bot Identity

2. Purpose

Breakout-Follower is a momentum strategy that enters Polymarket binary markets when a high-confidence news event causes a price breakout beyond configurable Bollinger Band thresholds. It scales in across multiple steps and trails a stop using an ATR multiple, acting as the directional complement to Mean-Reversion Sniper.

3. Why This Bot Matters

• Low-confidence news signal

  Entering on weak or ambiguous news causes the trade to mean-revert rather than sustain, resulting in a loss on each scale-in step.

• Trail stop too tight

  A trailing stop set too close to the current price gets triggered by normal volatility before the trend matures, cutting a profitable position prematurely.

• No exit discipline on reversal

  Without an ATR-based stop, a breakout that fails can become a runaway adverse position as the market reverts toward its pre-news price.

No worked examples on this bot yet. Worked examples are optional but strongly recommended — they turn an abstract failure mode into something a developer can verify in a fixture.

4. Required Polymarket Inputs

5. Required Internal Inputs

6. Parameter Guide

7. Detailed Parameter Instructions

{ "news_confidence_min": 0.8 }

if news_confidence < params.hard: return skip('BREAKOUT_CONFIDENCE_BELOW_FLOOR')

{ "bollinger_stdev": 2.0 }

if params.bollinger_stdev < params.hard: raise ConfigError('PARAMETER_CHANGE_REQUIRES_APPROVAL')

{ "scale_in_steps": 3 }

if params.scale_in_steps > params.hard: raise ConfigError('PARAMETER_CHANGE_REQUIRES_APPROVAL')

{ "trail_atr_multiple": 1.5 }

if params.trail_atr_multiple < params.hard: raise ConfigError('PARAMETER_CHANGE_REQUIRES_APPROVAL')

8. Default Configuration

{
  "bot_id": "strat.breakout_follower",
  "version": "0.1.0",
  "mode": "shadow_only",
  "defaults": {
    "news_confidence_min": 0.8,
    "bollinger_stdev": 2.0,
    "scale_in_steps": 3,
    "trail_atr_multiple": 1.5
  },
  "locked": {
    "news_confidence_min": {
      "min": 0.5
    },
    "bollinger_stdev": {
      "min": 1.0
    },
    "scale_in_steps": {
      "max": 5
    },
    "trail_atr_multiple": {
      "min": 0.5
    }
  }
}

9. Implementation Flow

1. Check KillSwitch; if active, emit no OrderIntents.
2. FETCH news materiality signal; if confidence < hard (0.50), skip BREAKOUT_CONFIDENCE_BELOW_FLOOR.
3. FETCH ws_market book; compute Bollinger Band from recent price history.
4. IF price NOT outside bollinger_stdev bands: skip (no breakout).
5. Determine breakout direction from news signal.
6. Compute per-step size = max_position_pUSD / scale_in_steps.
7. For step 1: EMIT IOC OrderIntent in breakout direction.
8. Store entry price and current ATR in state; compute initial trail_stop = entry - trail_atr_multiple * ATR.
9. On each subsequent tick: check if trail_stop triggered; if so, EMIT exit IOC OrderIntent.
10. On new ticks in trend direction: update trail_stop upward (ratchet-only).
11. EMIT DecisionReport with intent_emitted=true, reason=BREAKOUT_ENTRY or BREAKOUT_TRAIL_STOP.

10. Reference Implementation

Pseudocode is language-agnostic. FETCH = read input. EMIT = produce output. IF/THEN/ELSE = decision. Translate directly to TypeScript, Python, Go, or Rust.

FUNCTION onNewsTick(market_id, newsSignal):
  ks = FETCH internal.killswitch.status
  IF ks.active: RETURN

  // Gate on news confidence
  IF newsSignal.confidence < params.news_confidence_min_hard:  // 0.50
    EMIT DecisionReport(intent_emitted=false, reason='BREAKOUT_CONFIDENCE_BELOW_FLOOR')
    RETURN

  mkt = FETCH clob_public.GET('/markets/' + market_id)
  IF mkt.closed OR mkt.resolved: RETURN

  // Check Bollinger Band breakout
  book = FETCH ws_market.book(market_id)
  price = book.last_trade_price
  bbUpper, bbLower = computeBollingerBands(market_id, params.bollinger_stdev)
  IF price <= bbUpper AND price >= bbLower: RETURN  // No breakout

  // Size computation
  sizeMultiplier = 0.5 IF newsSignal.confidence < params.news_confidence_min_warn ELSE 1.0
  IF sizeMultiplier < 1.0: WARN('BREAKOUT_LOW_CONFIDENCE')
  stepSize = toPusdUnits(params.max_position_usd / params.scale_in_steps * sizeMultiplier)

  // Emit step 1 entry
  direction = newsSignal.direction
  EMIT OrderIntent(market=market_id, outcome=direction, side='buy', price=book.best_ask,
                   size_pUSD=stepSize, tif='IOC', builder=internalBuilderCode)

  atr = FETCH internal.volatilityModel.ATR(market_id)
  trailStop = book.last_trade_price - params.trail_atr_multiple * atr
  STORE state.position(market_id, {step:1, trail_stop:trailStop, entry_price:price})
  EMIT DecisionReport(intent_emitted=true, reason='BREAKOUT_ENTRY', step=1)

SDK calls used

• ws_market.subscribe('book', [market_id])
• fetchClobPublic('/markets/' + market_id)
• internal.newsAdapter.signal(market_id)
• internal.volatilityModel.ATR(market_id)
• buildOrderTypedData(orderParams, {name:'CTFExchange', version:'2', chainId:137})

Complexity: O(1) per news tick per market; O(open_positions) per book tick for trail-stop evaluation

11. Wire Examples

Input — what arrives on the wire

News signal — high confidence breakout — internal (news adapter)

{
  "market_id": "0xbf00000000000000000000000000000000000000000000000000000000000001",
  "news_confidence": 0.88,
  "direction": "YES",
  "bollinger_stdev_actual": 2.3,
  "atr": 0.03,
  "received_at_ms": 1746790800000
}

Output — what the bot emits

OrderIntent — breakout step 1 IOC buy YES

{
  "intent_id": "oi_01HBF0000001A",
  "market_id": "0xbf00000000000000000000000000000000000000000000000000000000000001",
  "outcome": "YES",
  "side": "buy",
  "price": "0.720",
  "size_pUSD": "150.00",
  "tif": "IOC",
  "builder": {
    "code": "0x706f6c7974726164657273000000000000000000000000000000000000000000",
    "fee_bps": 25
  },
  "decision": {
    "step": 1,
    "reasons": [
      "BREAKOUT_ENTRY"
    ]
  }
}

12. Decision Logic

13. Standard Decision Output

This bot returns a OrderIntent object. See OrderIntent schema.

{
  "intent_id": "oi_01HBF0000001A",
  "trace_id": "tr_01HBF000TR001",
  "market_id": "0xbf00000000000000000000000000000000000000000000000000000000000001",
  "outcome": "YES",
  "side": "buy",
  "price": "0.720",
  "size_pUSD": "150.00",
  "tif": "IOC",
  "post_only": false,
  "builder": {
    "code": "0x706f6c7974726164657273000000000000000000000000000000000000000000",
    "fee_bps": 25
  },
  "negrisk_aware": false,
  "decision": {
    "news_confidence": 0.88,
    "bollinger_stdev_actual": 2.3,
    "step": 1,
    "trail_stop": 0.68,
    "reasons": [
      "BREAKOUT_ENTRY"
    ]
  },
  "comment": "fees are operator-set at match time in V2 \u2014 feeRateBps is NOT on the signed order"
}

14. Reason Codes

15. Metrics & Logs

Metrics emitted

Alerts

16. Developer Reporting

{
  "bot_id": "strat.breakout_follower",
  "market_id": "0xbf00000000000000000000000000000000000000000000000000000000000001",
  "news_confidence": 0.88,
  "bollinger_stdev_actual": 2.3,
  "step": 1,
  "trail_stop": 0.68,
  "intent_emitted": true,
  "reason": "BREAKOUT_ENTRY",
  "emitted_at_ms": 1746790800000
}

17. Plain-English Reporting

18. Failure-Mode Block

19. Failure-Injection Recipes

20. State & Persistence

Cold-start recovery

On cold start, active positions re-read from exec layer; trail stop recomputed from current ATR.

21. Concurrency & Idempotency

22. Dependencies

Depends on (must run first)

Emits to (downstream consumers)

External services

23. Security Surfaces

Abuse vectors considered

• News signal injection to induce false breakout trades
• ATR manipulation to force trail-stop triggers

Mitigations

• News signals sourced from authenticated internal adapter only
• ATR computed from internal volatility model using CLOB tick history
• Trail stop ratchets only in trend direction — cannot be loosened programmatically

24. Polymarket V2 Compatibility

API surfaces declared

Networks supported

25. Versioning & Migration

Migration history

26. Acceptance Tests

Unit Tests

Integration Tests

Property Tests

27. Operational Runbook

Breakout-Follower incidents are typically stale news feeds (blocking new entries) or kill-switch activations. Trail-stop triggers are expected normal behavior and do not require escalation.

On-call actions

Manual overrides

• —

Healthcheck

GET /internal/health/breakout-follower -> 200 if News feed age < 5s; ATR model active; KillSwitch inactive.. Red: News adapter down or KillSwitch active..

28. Promotion Gates

A bot does not advance to the next readiness state until every gate below is green. Gates are observable from production data — no subjective sign-off.

Promote to Shadow

Promote to Limited live

Promote to General live

29. Developer Checklist

Ready-to-ship score: 27/27 sections complete · 100%