In this guide
What separates traders who generate steady returns from those treading water or facing losses typically hinges on methodology rather than forecasting acumen alone. This guide outlines the core disciplines that seasoned market participants apply during every trading session.
Before Entering Any Position
- Articulate your edge: What information or insight do you possess that remains unavailable to the broader market? Commit this reasoning to a single sentence prior to executing any trade.
- Check the spread: Does the gap between buy and sell prices remain sufficiently tight that your advantage outweighs the cost of transacting?
- Assess liquidity: Will you be able to unwind this holding at a profit should circumstances demand it? Examine the depth of available orders.
- Set your probability independently: Establish your forecast without reference to existing market quotations, thereby protecting yourself from anchoring effects.
- Calculate position size: Apply the half-Kelly criterion. Never risk more than 5% of your capital on any single trade, regardless of confidence level.
During Position Management
- Update on new information: Following significant developments (speeches, economic data, announcements), recalibrate your forecast and determine whether to expand, maintain, or liquidate your stake.
- Don't check obsessively: Intraday swings represent statistical noise rather than signal. For markets with longer timeframes, review your holdings once daily rather than repeatedly throughout the day.
- Pre-define your exit criteria: Establish the price threshold at which you will close a losing position before you initiate the trade, thereby removing emotion from the decision.
After Each Market Resolves
- Record everything: Document the timestamp, market identifier, your forecast, the price you paid, the final result, and your gain or loss
- Score your calibration: Did predictions you assigned 70% confidence to actually occur roughly 70% of the time?
- Categorize by market type: Do your returns vary significantly across political, digital asset, or athletic betting segments?
- Review your losers honestly: Did this loss stem from flawed reasoning or from sound methodology that simply encountered an unlucky outcome?
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 the majority of participants. Evaluating daily tends to encourage excessive turnover; waiting until month-end allows valuable correction signals to slip away.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio management system provides a solid foundation. For more granular reporting, export your transaction log to CSV format and process it through Excel, Google Sheets, or a Python script.
- How many markets should I research before entering each week?
- Depth of analysis outweighs breadth. Conducting rigorous due diligence on 3-5 opportunities typically yields superior results compared to cursory examination of dozens.