Build a prediction market bot, starting with paper trading

// Educational offline replay, Node.js 22+. No network, keys or live orders.
// Run: node paper_bot.mjs paper_quotes.json
import { readFile } from 'node:fs/promises';
import { pathToFileURL } from 'node:url';

const UNIT = 1_000_000n;
export function money(value) {
  if (typeof value !== 'string' || !/^\d+(\.\d{1,6})?$/.test(value))
    throw new Error('Money must be a nonnegative decimal string with at most 6 places.');
  const [whole, fraction = ''] = value.split('.');
  return BigInt(whole) * UNIT + BigInt(fraction.padEnd(6, '0'));
}
const dollars = value => `${value < 0n ? '-' : ''}${(value < 0n ? -value : value) / UNIT}.${((value < 0n ? -value : value) % UNIT).toString().padStart(6, '0')}`;
const min = (...values) => values.reduce((a, b) => a < b ? a : b);
function integer(value, name) {
  if (!Number.isSafeInteger(value) || value < 0) throw new Error(`Invalid ${name}.`);
  return value;
}

export function replay(quotes, options = {}) {
  if (!Array.isArray(quotes) || quotes.length === 0 || quotes.length > 10_000)
    throw new Error('Provide 1–10,000 observations.');
  const initial = money(options.cash ?? '20');
  const fee = money(options.feePerContract ?? '0.01'); // illustrative, NOT a venue fee formula
  const slippage = money(options.slippagePerContract ?? '0.005');
  const edge = money(options.minimumEdge ?? '0.03');
  const lossLimit = money(options.lossLimit ?? '2');
  const maxAge = integer(options.maxAgeMs ?? 2000, 'maximum age');
  const maxPosition = BigInt(integer(options.maxPosition ?? 4, 'maximum position'));
  const orderSize = BigInt(integer(options.orderSize ?? 2, 'order size'));
  let cash = initial, position = 0n, lastBid = null, halted = false;
  let lastReceived = -1, newestSource = -1, market = null;
  const seen = new Set(), events = [];

  for (const row of quotes) {
    if (!row || typeof row !== 'object') throw new Error('Invalid observation.');
    const at = integer(row.at_ms, 'source timestamp');
    const received = integer(row.received_ms, 'receipt timestamp');
    if (received < lastReceived) throw new Error('Receipt timestamps must be ordered.');
    lastReceived = received;
    if (typeof row.market !== 'string' || !row.market) throw new Error('Missing market identifier.');
    if (market && row.market !== market) throw new Error('This example replays one market only.');
    market = row.market;
    const event = { at_ms: at, action: 'skip', reason: '' };
    const skip = reason => { events.push({ ...event, reason }); };
    if (row.stop === true) halted = true;
    if (halted) { skip('kill switch'); continue; }
    if (received < at || received - at > maxAge) { skip('stale or future quote'); continue; }
    if (row.status !== 'open') { skip('market not open'); continue; }
    if (seen.has(at)) { skip('duplicate snapshot'); continue; }
    if (at < newestSource) { skip('out-of-order source snapshot'); continue; }
    seen.add(at);
    newestSource = at;
    const bid = money(row.bid), ask = money(row.ask), fair = money(row.fair);
    if (bid <= 0n || ask >= UNIT || bid > ask || fair > UNIT)
      throw new Error('Expected 0 < bid <= ask < 1 and 0 <= fair <= 1.');
    const bidSize = BigInt(integer(row.bid_size, 'bid depth'));
    const askSize = BigInt(integer(row.ask_size, 'ask depth'));
    lastBid = bid;
    const sellPrice = bid - slippage - fee;
    const markedEquity = cash + position * (sellPrice > 0n ? sellPrice : 0n);
    if (initial - markedEquity >= lossLimit) {
      halted = true; skip('loss limit; position remains open'); continue;
    }
    const buyPrice = ask + slippage + fee;
    let quantity = 0n, action = 'skip';
    if (position > 0n && sellPrice - fair >= edge) {
      action = 'sell'; quantity = min(position, orderSize, bidSize);
      cash += quantity * sellPrice; position -= quantity;
    } else if (fair - buyPrice >= edge) {
      action = 'buy'; quantity = min(maxPosition - position, orderSize, askSize, cash / buyPrice);
      cash -= quantity * buyPrice; position += quantity;
    }
    events.push({ at_ms: at, action: quantity > 0n ? action : 'skip',
      reason: quantity > 0n ? 'simulated fill' : 'edge, depth or exposure limit',
      contracts: Number(quantity), cash: dollars(cash), position: Number(position) });
  }
  const liquidation = lastBid === null ? null : (lastBid > fee + slippage ? lastBid - fee - slippage : 0n);
  return { mode: 'offline paper replay', events, cash: dollars(cash), position: Number(position),
    equity_at_last_quote: liquidation === null ? null : dollars(cash + position * liquidation),
    pnl_at_last_quote: liquidation === null ? null : dollars(cash + position * liquidation - initial),
    halted, note: 'Synthetic fair values; hypothetical top-of-book fills. Last-quote marks may be stale and ignore exit depth. No settlement, queue or latency model.' };
}

if (process.argv[1] && import.meta.url === pathToFileURL(process.argv[1]).href) {
  try {
    if (!process.argv[2]) throw new Error('Usage: node paper_bot.mjs paper_quotes.json');
    console.log(JSON.stringify(replay(JSON.parse(await readFile(process.argv[2], 'utf8'))), null, 2));
  } catch (error) { console.error(error.message); process.exitCode = 1; }
}