In this guide
Key takeaway: Liquidity stands as the paramount consideration for anyone trading prediction markets. When liquidity runs deep, you benefit from compressed spreads, rapid order execution, and market prices that accurately reflect consensus. Polymarket dominates the space with over $1.5B in total traded volume; the vast majority of alternative venues operate with substantially lower liquidity pools.
Prediction market liquidity shapes your entire trading experience — influencing execution prices, position exit speed, and overall profitability. However, newcomers typically prioritise market selection over assessing liquidity conditions. This article explores why liquidity should be your primary consideration.
What is liquidity?
Liquidity in financial markets refers to the ease with which you can transact an asset without materially affecting its price. Within prediction markets, liquidity comprises three distinct elements:
- Depth: The quantity of shares available across different price tiers within the order book
- Spread: The distance separating the highest purchase price (bid) from the lowest sale price (ask)
- Volume: The total number of shares traded during a specified timeframe
A market offering 10,000 shares at 48 cents on the buy side and 10,000 at 50 cents on the sell side demonstrates strong liquidity. Conversely, a market with merely 50 shares per side separated by a 10-cent gap exhibits poor liquidity conditions.
Why liquidity matters for traders
Insufficient liquidity erodes your profitability through multiple mechanisms:
- Expanded spreads: Transaction costs increase both when entering and closing trades
- Slippage: Sizeable positions cause adverse price movement against your interests
- Illiquid holdings: Absence of willing buyers prevents you from liquidating before market settlement
- Distorted valuations: Thin markets produce prices disconnected from actual probability assessments
How to measure prediction market liquidity
Prior to executing any trade, examine these metrics:
- Order book depth: On PolyGram, the depth chart displays the magnitude of buy and sell orders at each price
- 24h volume: Elevated volume indicates robust trader participation — facilitating speedier order fills
- Number of unique traders: Markets attracting 100+ distinct participants typically maintain sufficient liquidity for standard retail positions
- Spread percentage: Prioritise markets where spreads remain below 3 cents (3%) to minimise trading expenses
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 simultaneously post complementary buy and sell orders, capturing the spread whilst supplying depth to the broader market. Polymarket incentivises these participants through fee reductions and MATIC incentive schemes. PolyGram's proprietary liquidity engine synchronises with Polymarket's order flow, guaranteeing PolyGram participants access to equivalent market depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Employ limit orders exclusively — avoid market orders when order book depth is thin
- Distribute substantial orders across multiple price points
- Exercise patience: position your desired price and await execution rather than accepting unfavourable spreads
- Evaluate timing dynamics — liquidity frequently improves as markets approach their resolution date
Execute your trades on the most liquid crypto prediction market platform. Start trading on PolyGram →