In this guide
What separates traders who generate steady returns from those treading water or facing losses is rarely about raw forecasting ability alone—it's fundamentally about discipline and methodology. This guide outlines the core habits that institutional-grade market participants follow in their daily operations.
Before Entering Any Position
- Articulate your edge: What insight gives you an advantage over the broader market? Commit this to a single clear statement before committing capital.
- Check the spread: Does the gap between bid and ask prices allow your edge to survive slippage and fees?
- Assess liquidity: Will you be able to unwind this trade at a reasonable price if conditions shift? Examine the depth of available orders.
- Set your probability independently: Develop your forecast in isolation before consulting market consensus, preventing cognitive anchoring.
- Calculate position size: Apply the half-Kelly criterion. Never risk more than 5% of total capital on a single trade, regardless of confidence level.
During Position Management
- Update on new information: When pivotal events materialise (speeches, economic data, announcements), reassess your odds and determine whether to increase, maintain, or liquidate exposure.
- Don't check obsessively: Intraday swings represent statistical noise. Monitor your holdings on a daily cadence rather than minute-by-minute for positions with extended time horizons.
- Pre-define your exit criteria: At what market level will you cut losses if your thesis proves incorrect? Lock this decision in before deployment to sidestep emotional reactions.
After Each Market Resolves
- Record everything: Capture the settlement date, market identifier, your forecast odds, entry price, final outcome, and realised gain or loss.
- Score your calibration: Did your predictions marked at 70% confidence actually resolve correctly approximately 70% of the time?
- Categorize by market type: Are you consistently more accurate in geopolitical versus crypto versus sporting event markets?
- Review your losers honestly: Did poor methodology lead to this loss, or did sound reasoning simply encounter unfavourable randomness?
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 works best for the majority of market participants. Examining results every day encourages excessive turnover; waiting a full month allows correctable patterns to compound.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio management system provides a solid foundation. For more granular analysis, export your transaction log to CSV format and process it through spreadsheet applications or custom Python scripts.
- How many markets should I research before entering each week?
- Depth of analysis outweighs breadth. Conducting rigorous due diligence on 3-5 opportunities yields superior outcomes compared to cursory examination of dozens.