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

Every wager in a prediction market boils down to a straightforward expected value equation. Mastering this calculation ensures you approach each position with clarity — you'll understand precisely what success rate you need, at what odds, to achieve profitability.

Basic Return Calculation

When you acquire a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage gain should YES resolve affirmatively
• Loss: 100% of your capital at stake if NO resolves
• Break-even probability: P (the prevailing market price represents your break-even threshold)

Worked 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, where you assess the true probability at 55%:

• Payout if YES resolves: $150 (you receive $250 total, having invested $100)
• Outcome if NO resolves: -$100
• EV = (0.55 × $150) - (0.45 × $100) = $82.50 - $45 = +$37.50 expected value

How to Use This in Practice

1. Establish your probability assessment BEFORE placing any trade
2. Determine the break-even threshold (equivalent to the quoted market price)
3. When your estimate exceeds break-even by a margin wider than the bid-ask spread: compelling buy opportunity
4. When your estimate falls short of break-even: explore NO shares as an alternative
5. When your estimate aligns closely with break-even: pass — insufficient advantage

Position Size Calculator

Applying the half-Kelly criterion: f = 0.5 × (bp - q) / b

• For a scenario 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 total capital)
• Half Kelly: 21% of total capital — apply the 5% maximum per trade constraint regardless

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected entry price, quantity of shares, and maximum return directly within the order confirmation screen before you commit. Performing your own EV analysis beforehand remains invaluable for thorough due diligence.

How do spreads affect the return calculation?

Modify your actual entry price to reflect half the spread width. Should YES trade with bid=0.38 and ask=0.42, your realistic cost basis is approximately 0.42 rather than 0.40.