In this guide
Key takeaway: Liquidity stands as the paramount consideration for those trading prediction markets. When liquidity runs deep, you benefit from compressed bid-ask spreads, rapid order execution, and market prices that genuinely reflect probabilities. Polymarket dominates the landscape with $1.5B+ in total traded volume; the vast majority of rival platforms operate at substantially lower levels.
Prediction market liquidity shapes your entire trading experience — influencing both the cost of entry and your ability to unwind positions swiftly. Regrettably, newcomers often prioritise which markets exist rather than assessing their depth. This article explores why depth and ease of execution trump all other considerations.
What is liquidity?
Within financial markets, liquidity refers to the ease with which you can acquire or dispose of an asset without materially altering its market price. When applied to prediction markets, liquidity encompasses three distinct dimensions:
- Depth: The quantity of shares obtainable at each tier within the order book
- Spread: The distance separating the highest purchase offer from the lowest sale offer
- 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 on the sell side at 50 cents demonstrates adequate liquidity. Conversely, a market with merely 50 shares available on each side and a 10-cent gap exhibits poor liquidity.
Why liquidity matters for traders
Insufficient liquidity erodes your profitability through multiple channels:
- Wider spreads: You incur greater costs when initiating and closing trades
- Slippage: Substantial orders shift market prices unfavourably for your position
- Trapped positions: Absence of willing buyers prevents you from liquidating holdings before market settlement
- Price inaccuracy: Thin markets generate prices that diverge from genuine probability assessments
How to measure prediction market liquidity
Prior to executing any trade, examine these metrics:
- Order book depth: Leverage PolyGram's depth chart to observe concentrations of buy and sell interest
- 24h volume: Elevated trading activity correlates with improved fill likelihood — your orders get matched faster
- Number of unique traders: Markets attracting 100+ distinct participants ordinarily possess sufficient depth for standard retail positions
- Spread percentage: Target markets displaying spreads beneath 3 cents (3%) for economical execution
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 competing bids and asks, capturing the spread differential whilst supplying depth to the broader trading community. Polymarket incentivises these participants through fee reductions and MATIC token distributions. PolyGram's proprietary liquidity engine replicates Polymarket's order book architecture, guaranteeing PolyGram participants access to equivalent depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Employ limit orders exclusively — refrain from market orders when order books are thin
- Distribute sizable positions across multiple price tiers
- Exercise restraint: establish your target price and await execution rather than accepting unfavourable fills
- Factor in timeline dynamics — sparse markets frequently gain depth as settlement approaches
Trade on the most liquid prediction market platform. Start trading on PolyGram →