Professional-grade prediction market tools. Calculate expected value, optimal position size, arbitrage opportunities, and build multi-event portfolios.
Is this bet worth taking?
Optimal position sizing for maximum growth
Find risk-free opportunities across outcomes
Model profit and loss across probability scenarios
Is the return worth the wait?
Construct and analyze a portfolio of prediction market positions
| Event | Side | Price | Qty | Prob | EV | Kelly % | |
|---|---|---|---|---|---|---|---|
| % | -- | -- |
Prediction markets like Polymarket have emerged as one of the most efficient mechanisms for aggregating information about future events. But for individual traders, the real opportunity lies not in having better information than the crowd, but in being more disciplined about how you size, structure, and manage your positions.
The tools on this page implement the same quantitative frameworks used by professional market-makers and hedge funds. Understanding them is the difference between gambling and trading.
Expected value is the single most important concept in prediction market trading. A contract priced at $0.60 implies the market believes there is a 60% chance the event occurs. If your research suggests the true probability is 70%, the contract is underpriced and has positive expected value.
A positive EV means the bet is worth taking over the long run. But positive EV alone is not enough. You also need to size the position correctly, account for capital lockup, and consider correlation with your other positions.
Once you identify a positive EV opportunity, the next question is how much of your bankroll to risk. The Kelly Criterion provides the mathematically optimal answer: it maximizes your long-term compound growth rate while minimizing the probability of ruin.
In prediction markets, the Kelly formula simplifies beautifully. If you estimate the true probability at p and the market price is c, the full Kelly fraction is:
Most professionals use fractional Kelly, typically 25-50% of the full recommendation. This sacrifices some theoretical growth for dramatically smoother returns and a much lower chance of drawdown. Our calculator lets you adjust the fraction with a slider.
Arbitrage in prediction markets occurs when the sum of YES and NO prices across platforms is less than $1.00. This creates a guaranteed profit regardless of outcome. While pure arbitrage is rare on a single platform, cross-platform opportunities exist, especially during volatile news events when prices diverge temporarily.
Even within a single platform, monitoring the YES + NO spread reveals how efficiently the market is pricing an event. A spread significantly above $1.00 indicates high fees or illiquidity, which creates opportunities for patient limit orders.
One of the most overlooked risks in prediction markets is capital lockup. A position that returns 30% sounds compelling, but if it takes 12 months to resolve, the annualized return is only 30%. Compare that to the risk-free rate or other opportunities, and the position may not be worth the capital commitment.
Our Capital Lockup Analyzer calculates the annualized return and compares it against the opportunity cost of a benchmark yield. Events resolving within 30 days can tolerate lower absolute returns because the annualized equivalent is much higher.
Sophisticated prediction market traders think in portfolios, not individual bets. Diversifying across uncorrelated events reduces variance while preserving expected returns. Our Portfolio Builder lets you model multiple positions simultaneously, calculating aggregate EV, total capital deployment, and optimal allocation across your positions.
The key principle: no single event should represent more than 10% of your prediction market bankroll. Even with a strong edge, concentration risk can wipe out months of disciplined trading with a single adverse outcome.
Expected value is the average profit or loss per contract if you repeated the same trade thousands of times. It combines your estimated probability of winning with the potential payout and cost. Positive EV bets are profitable long-term; negative EV bets are not.
The Kelly Criterion tells you the optimal fraction of your bankroll to wager. In prediction markets, it accounts for the contract price and your edge. Most professionals use fractional Kelly (25-50%) to reduce variance while maintaining positive expected growth.
Arbitrage occurs when you can buy contracts covering all outcomes for less than the guaranteed payout. For binary events, this means YES + NO prices sum to less than $1.00. The profit is the difference, guaranteed regardless of outcome.
Professional traders typically allocate 5-20% of total trading capital to prediction markets. Within that, no single event should exceed 5-10% of your prediction market bankroll. The Kelly Criterion helps determine exact sizing for each opportunity.
Capital lockup risk occurs when your funds are tied up in a position for weeks or months. Even profitable positions may have poor annualized returns when capital is locked for long periods. Always compare the annualized return against alternatives.
Yes. These calculators work with any binary prediction market — Kalshi, PredictIt, Metaculus, or any platform where contracts trade between $0 and $1. The math is universal.
Fractional Kelly means betting a percentage (typically 25-50%) of what full Kelly recommends. Full Kelly maximizes growth but causes large swings. Fractional Kelly trades some growth for smoother equity curves and lower risk of significant drawdown.
For a YES contract, the break-even probability equals the contract price. Buy at $0.65, you need at least a 65% chance to break even. If your probability estimate exceeds the price, the trade has positive expected value.
