In this guide
What separates traders who generate steady returns from those treading water or falling behind is rarely about raw forecasting skill alone. Instead, it hinges on disciplined methodology and systematic execution. This guide outlines the core routines that successful market participants follow in their daily operations.
Before Entering Any Position
- Articulate your edge: What insight or information advantage do you possess that the broader market has overlooked? Commit this to a single clear statement before committing capital.
- Check the spread: Does the width of the bid-ask gap allow your edge to survive slippage and fees?
- Assess liquidity: Will you be able to unwind this position at a reasonable price if circumstances demand it? Examine the depth of available orders.
- Set your probability independently: Develop your own estimate in isolation, prior to observing current market quotations, to guard against anchoring.
- Calculate position size: Apply the half-Kelly criterion. Never risk more than 5% of total capital on any single trade, regardless of confidence level.
During Position Management
- Update on new information: When significant events materialise (speeches, economic figures, breaking news), revise your probability assessment and determine whether to increase, maintain, or close your stake.
- Don't check obsessively: Minute-to-minute price swings represent statistical noise rather than fundamental shifts. Review holdings once daily for medium and longer-term markets.
- Pre-define your exit criteria: Establish in advance the price level or condition at which you will liquidate a losing position. Lock this in before you trade to prevent emotion-driven choices.
After Each Market Resolves
- Record everything: Capture the settlement date, market identifier, your stated confidence level, entry price observed in the market, final result, and realised gain or loss.
- Score your calibration: Did outcomes marked as 70% probable actually occur roughly 70% of the time across your track record?
- Categorize by market type: Do your returns vary significantly across different sectors—for instance, elections compared to digital assets compared to sporting events?
- Review your losers honestly: Did the loss stem from flawed reasoning and methodology, or was it simply an unlucky outcome despite sound decision-making?
Weekly Review Routine
- Verify all open positions and reconcile cumulative returns
- Compute rolling 30-day and 90-day Brier scores
- Scan the forward calendar for scheduled announcements (central bank decisions, electoral cycles, key economic indicators)
- Detect any recurring patterns or tendencies in your recent activity
- Adjust portfolio weightings across markets if rebalancing is warranted
FAQ
- How often should I review my prediction market performance?
- A weekly cadence works best for the majority of participants. Checking daily tends to encourage excessive trading activity; reviewing only monthly allows problems to compound unchecked.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio management tool provides a solid foundation. For more granular reporting and custom metrics, export your transaction log as CSV and process it through Excel, Google Sheets, or a Python script.
- 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 results compared to superficial examination of a larger universe.