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

Every prediction market trade hinges on a fundamental expected value calculation. Mastering this framework ensures you approach each position with clarity — you'll understand precisely what accuracy rate, confidence threshold, and win frequency you require to achieve profitability.

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)

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

• Win amount if YES: $150 (receive $250, paid $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. Before every trade, write your probability estimate FIRST
2. Calculate break-even probability (= market price)
3. If your estimate > break-even by more than the spread: strong buy signal
4. If your estimate < break-even: consider NO shares instead
5. If your estimate ≈ break-even: skip — insufficient edge

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 execution price, quantity of shares allocated, and final settlement value within its trading interface prior to order submission. Performing your own EV analysis beforehand remains instrumental for evaluating opportunities.

How do spreads affect the return calculation?

Modify your effective purchase price by incorporating half the bid-ask spread. Should YES trade with bid=0.38 and ask=0.42, your realistic entry point approximates 0.42 rather than 0.40.