In this guide
Key takeaway: Liquidity stands as the cornerstone consideration for anyone trading prediction markets. When liquidity runs deep, you benefit from compressed spreads, expedited order execution, and pricing that accurately reflects reality. Polymarket dominates the landscape with $1.5B+ in total traded volume; the vast majority of alternative venues operate at substantially lower levels of market depth.
Prediction market liquidity shapes virtually every aspect of your trading journey — spanning the cost at which you enter and exit, alongside the speed at which you can unwind exposure. Yet many newcomers prioritise market selection over liquidity assessment. This resource demonstrates precisely why liquidity should rank as your primary concern.
What is liquidity?
Within financial markets, liquidity refers to the ease with which you can acquire or dispose of an asset without materially shifting its price. For prediction markets in particular, three distinct dimensions define liquidity:
- Depth: The quantity of shares accessible at various price tiers throughout the order book
- Spread: The distance separating the highest bidding price from the lowest asking price
- Volume: The total number of shares transacted throughout a specified timeframe
Consider a market displaying 10,000 shares offered at 48 cents and 10,000 shares requested at 50 cents — this represents genuine liquidity. Conversely, a market with merely 50 shares on either side and a 10-cent gap exemplifies illiquidity.
Why liquidity matters for traders
Insufficient liquidity erodes your profitability through multiple channels:
- Wider spreads: You forfeit additional capital upon both entry and departure from trades
- Slippage: Sizable positions push market prices unfavourably during execution
- Trapped positions: Absence of willing buyers may lock you into holdings through settlement
- Price inaccuracy: Sparse trading conditions produce prices misaligned with genuine probabilities
How to measure prediction market liquidity
Prior to initiating any trade, examine these metrics:
- Order book depth: PolyGram's depth chart enables visual inspection of cumulative buy and sell interest
- 24h volume: Elevated activity correlates with improved fill likelihood — traders encounter less friction
- Number of unique traders: Markets attracting 100+ distinct participants ordinarily possess sufficient depth for standard retail positions
- Spread percentage: Target venues where the gap remains below 3 cents (3%) to minimise transaction friction
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 deploy coordinated buy and sell orders simultaneously, capturing profit via the spread whilst furnishing other participants with tradeable depth. Polymarket incentivises these operators through fee concessions and MATIC token distributions. PolyGram's proprietary liquidity engine replicates Polymarket's order book architecture, guaranteeing PolyGram participants access equivalent market depth as those trading Polymarket directly.
Tips for trading illiquid markets
- Restrict yourself to limit orders — refrain from market purchases when order books lack depth
- Distribute sizable trades across multiple price points
- Exercise patience: establish your target price and await a counterparty rather than accepting unfavourable terms
- Factor in timing — sparse markets frequently attract greater participation as expiration approaches
Engage with the most liquid prediction market venue. Start trading on PolyGram →