Prediction Market Returns Calculator: How Much Can You Make on Each Trade?

Every prediction market trade hinges on a straightforward expected value calculation. Mastering this mathematics ensures you approach each position with full clarity — you'll understand precisely what success rate you require, at what odds, and what threshold separates profit from loss.

Basic Return Calculation

For a YES share acquired at price P:

• Win return: (1 - P) / P × 100% = your percentage profit if YES wins
• Loss: 100% of your stake if NO wins
• Break-even probability: P (the market price IS the break-even probability)

Examples:

• YES at $0.20: win = +400%, break-even = 20%
• YES at $0.50: win = +100%, break-even = 50%
• YES at $0.75: win = +33%, break-even = 75%
• YES at $0.90: win = +11%, break-even = 90%

Expected Value Formula

EV = (Your probability × Win amount) - ((1 - Your probability) × Stake)

For a $100 position on YES at $0.40, assuming your assessed probability stands at 55%:

• Win amount if YES: $150 (you receive $250, having wagered $100)
• Loss if NO: -$100
• EV = (0.55 × $150) - (0.45 × $100) = $82.50 - $45 = +$37.50 expected value

How to Use This in Practice

1. Establish your probability estimate BEFORE committing to any trade
2. Determine break-even probability (which equals the market price)
3. If your estimate exceeds break-even by more than the spread: compelling buying opportunity
4. If your estimate falls below break-even: examine NO shares as an alternative
5. If your estimate aligns with break-even: pass — the edge isn't sufficient

Position Size Calculator

Using half-Kelly: f = 0.5 × (bp - q) / b

• For a trade where your p = 0.65, market = 0.40: b = 1.5, q = 0.35
• Full Kelly: (1.5 × 0.65 - 0.35) / 1.5 = 0.42 (42% of bankroll)
• Half Kelly: 21% of bankroll — still cap at 5% per position rule

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares allocated, and maximum return directly within the trade interface prior to execution. Undertaking your own EV analysis beforehand remains invaluable for thorough decision-making.

How do spreads affect the return calculation?

Adjust your effective purchase price by incorporating half the spread width. If YES carries a bid=0.38, ask=0.42 quotation, your realistic entry point is approximately 0.42 rather than 0.40.