In this guide
What separates traders who generate steady returns from those treading water or facing losses hinges primarily on disciplined methodology rather than forecasting ability alone. This guide outlines the critical protocols that seasoned professionals follow during every trading session.
Before Entering Any Position
- Articulate your edge: What insight gives you an advantage that other market participants lack? Commit this reasoning to a single sentence prior to committing capital.
- Check the spread: Will the gap between buy and sell prices consume your informational advantage through transaction friction?
- Assess liquidity: Should circumstances force an exit, can you unwind this holding at a profit? Examine the depth of available orders.
- Set your probability independently: Develop your forecast in isolation before observing quoted prices, thereby guarding against anchoring distortions.
- Calculate position size: Apply the half-Kelly criterion. Never risk more than 5% of total capital on any single wager, irrespective of confidence level.
During Position Management
- Update on new information: As significant developments materialise (speeches, economic indicators, announcements), revise your forecast and determine whether to expand, maintain, or liquidate your stake.
- Don't check obsessively: Minute-to-minute swings represent statistical variation rather than substantive shifts. Monitor holdings on a daily schedule for markets with extended timeframes.
- Pre-define your exit criteria: Establish in advance the threshold price at which you will close the position if your thesis proves incorrect, thereby removing emotion from the decision.
After Each Market Resolves
- Record everything: Capture the settlement date, market identifier, your forecast, the entry price observed, the final result, and realised gain or loss
- Score your calibration: Did your predictions assigned 70% likelihood occur roughly 70% of the time across your sample?
- Categorise by market type: Which domains—political outcomes, digital assets, athletic contests—yield your strongest edge?
- Review your losers honestly: Did flawed reasoning lead to this loss, or did sound methodology simply encounter unfavourable variance?
Weekly Review Routine
- Reconcile all positions and P&L
- Calculate rolling 30-day and 90-day Brier scores
- Review upcoming calendar events (Fed meetings, elections, major data releases)
- Identify any systematic biases in your recent trading
- Rebalance portfolio allocation if needed
FAQ
- How often should I review my prediction market performance?
- A weekly cadence suits most practitioners. Daily scrutiny encourages excessive trading; evaluating only monthly permits drift that could have been corrected sooner.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio management system provides a solid foundation. For deeper statistical work, export your transaction log as CSV and process the data through Excel, Google Sheets, or Python scripting.
- How many markets should I research before entering each week?
- Depth of analysis surpasses breadth of coverage. Thoroughly investigating 3-5 opportunities typically yields superior results compared to superficial examination of twenty candidates.