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

Every prediction market trade hinges on a straightforward expected value calculation. Mastering this mathematics ensures you approach each position with clarity — you'll understand precisely what success rate you require, at what odds, and what probability threshold separates profit from loss.

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 priced at $0.40, assuming your personal probability estimate stands 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 any trade, document your probability assessment FIRST
2. Determine 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 position 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 fill price, shares obtained, and likely returns in the trade interface prior to execution. Independent EV computation remains valuable for advance position evaluation.

How do spreads affect the return calculation?

Modify the effective purchase price by incorporating half the spread. If YES carries a bid=0.38, ask=0.42 quotation, your realistic entry approximates ~0.42 rather than 0.40.