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

Every prediction market trade hinges on a fundamental expected value calculation. Mastering this framework ensures you approach each position with clarity — you'll understand precisely what win rate you require, at which confidence levels, and what threshold delivers profitability.

Basic Return Calculation

When you acquire a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage profit if YES wins
• Loss: 100% of your stake if NO wins
• Break-even probability: P (the market price IS the break-even probability)

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%:

• Win amount if YES: $150 (receive $250, paid $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. Before committing capital, establish your probability estimate FIRST
2. Calculate break-even probability (= market price)
3. If your estimate > break-even by more than the spread: strong buy signal
4. If your estimate < break-even: consider NO shares instead
5. If your estimate ≈ break-even: skip — insufficient edge

Position Size Calculator

Using half-Kelly: f = 0.5 × (bp - q) / b

• For a trade 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 bankroll)
• Half Kelly: 21% of bankroll — still cap at 5% per position rule

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares, and settlement value in the order confirmation screen before you submit. Running your own EV analysis beforehand remains a best practice for trade vetting.

How do spreads affect the return calculation?

Adjust your entry price upward by incorporating half the bid-ask spread. If YES trades with bid=0.38, ask=0.42, your realistic entry sits around 0.42 rather than 0.40.