In this guide
Key takeaway: Liquidity stands as the paramount consideration for anyone trading prediction markets. When liquidity runs deep, you benefit from compressed bid-ask spreads, rapid order execution, and pricing that genuinely reflects market sentiment. Polymarket dominates the landscape with over $1.5B in total traded volume; rival platforms typically command substantially lower liquidity pools.
Prediction market liquidity shapes your entire trading journey — influencing execution costs, position exit speed, and the fairness of prices you encounter. Yet newcomers frequently prioritise market selection over liquidity assessment. This article clarifies why liquidity fundamentally outweighs other considerations.
What is liquidity?
Within financial markets, liquidity refers to the ease with which you can acquire or dispose of an asset without materially altering its price. For prediction markets, three distinct dimensions define liquidity:
- Depth: The quantity of shares available at successive price tiers within the order book
- Spread: The distance separating the highest purchasing price and the lowest selling price
- Volume: The total number of shares traded during a specified timeframe
A market offering 10,000 shares to buy at 48 cents alongside 10,000 shares to sell at 50 cents demonstrates adequate liquidity. Conversely, a market with merely 50 shares on either side and a 10-cent gap exhibits poor liquidity characteristics.
Why liquidity matters for traders
Insufficient liquidity erodes your profitability through multiple channels:
- Wider spreads: Transaction costs increase when entering and closing positions
- Slippage: Substantial orders push prices unfavourably for your side of the trade
- Trapped positions: Absence of willing counterparties prevents you from liquidating holdings before market settlement
- Price inaccuracy: Sparse trading activity generates prices disconnected from genuine probability assessments
How to measure prediction market liquidity
Prior to committing capital, evaluate these metrics:
- Order book depth: On PolyGram, consult the depth chart for visual representation of cumulative buy and sell interest
- 24h volume: Elevated trading activity correlates with improved order fulfilment likelihood
- Number of unique traders: Markets attracting 100+ distinct participants typically accommodate standard retail position sizes
- Spread percentage: Target markets where spreads remain below 3 cents (3%) for economical trading execution
Which platforms have the most liquidity?
| Platform | Cumulative volume | Avg. spread |
| Polymarket | $1.5B+ | 1-3 cents |
| Kalshi | $500M+ | 2-5 cents |
| Betfair Exchange | N/A (sports-focused) | 1-2% on sports |
| Augur/Azuro | $50M+ | 5-15 cents |
How market makers create liquidity
Institutional liquidity providers simultaneously post bids and offers, capturing spread differentials whilst supplying counterparty availability to the broader market. Polymarket attracts these participants through fee reductions and MATIC token incentives. PolyGram's integrated liquidity engine replicates Polymarket's order flow, guaranteeing PolyGram participants access identical order book depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Employ limit orders exclusively — avoid market orders when order book depth is sparse
- Distribute sizable positions across multiple price points
- Exercise patience: establish your target price and await execution rather than accepting unfavourable fills
- Account for temporal dynamics — thin markets frequently gain depth as resolution approaches
Trade on the most liquid prediction market platform. Start trading on PolyGram →