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

Any prediction market trade boils down to a basic expected value assessment. Mastering this framework ensures you approach each position with clarity — you'll understand precisely what win rate you require, at what odds, and which threshold separates profitable from break-even scenarios.

Basic Return Calculation

When you acquire a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage gain should YES resolve affirmatively
• Loss: 100% of your capital at risk if NO resolves instead
• Break-even probability: P (the quoted market price doubles as your break-even threshold)

Worked 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)

Consider a $100 position on YES quoted at $0.40, where you assess the true probability at 55%:

• Payout if YES: $150 (you collect $250 total, having risked $100)
• Forfeiture if NO: -$100
• EV = (0.55 × $150) - (0.45 × $100) = $82.50 - $45 = +$37.50 expected value

How to Use This in Practice

1. Before committing capital, establish your probability estimate independently
2. Determine break-even probability (which equals the market price)
3. If your estimate exceeds break-even by a margin wider than the spread: strong entry signal
4. If your estimate falls below break-even: examine NO shares as the alternative
5. If your estimate aligns closely with break-even: pass — insufficient advantage exists

Position Size Calculator

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

• For a scenario 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 — though the standard 5% per trade ceiling still applies

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares, and terminal payout directly within the order interface prior to execution. Conducting your own EV analysis beforehand remains a prudent discipline.

How do spreads affect the return calculation?

Adjust your effective purchase price upward by half the bid-ask spread. If YES trades with bid=0.38 and ask=0.42, your realistic entry point sits around 0.42 rather than 0.40.