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

Every prediction market trade boils down to a straightforward expected value calculation. Mastering this framework ensures you approach each position with full clarity — you'll understand precisely what win rate you need, at what frequency, and which probability thresholds yield profitability.

Basic Return Calculation

For a YES share acquired at price P:

• Win return: (1 - P) / P × 100% = your percentage gain when YES resolves affirmatively
• Loss: 100% of your initial capital if NO resolves
• Break-even probability: P (the quoted market price doubles as your break-even threshold)

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 (you receive $250 total, having risked $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. Establish your probability estimate BEFORE executing any trade
2. Determine the break-even probability (which equals the market price)
3. When your estimate exceeds break-even by more than the bid-ask spread: strong buy candidate
4. When your estimate falls below break-even: evaluate NO shares as an alternative
5. When your estimate aligns with break-even: pass — the edge is insufficient

Position Size Calculator

Using half-Kelly: 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 — though always enforce a 5% maximum per single position

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares, and expected settlement value within the order preview before you confirm. Running your own EV analysis beforehand remains a powerful discipline for trade vetting.

How do spreads affect the return calculation?

Modify your effective purchase price by incorporating half the spread width. If YES trades at bid=0.38, ask=0.42, your realistic entry point is approximately 0.42 rather than 0.40.