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

Every trade in a prediction market boils down to a straightforward expected value calculation. Master the mathematics and you'll never place a trade without clarity — you'll understand precisely what success rate you require, at which confidence threshold, and what minimum odds justify the risk.

Basic Return Calculation

When you purchase a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage gain should YES resolve affirmatively
• Loss: 100% of your initial outlay if NO resolves instead
• Break-even probability: P (the quoted market price doubles as your break-even threshold)

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%:

• Payout if YES resolves: $150 (you collect $250 total, having risked $100)
• Payout if NO resolves: -$100
• EV = (0.55 × $150) - (0.45 × $100) = $82.50 - $45 = +$37.50 expected value

How to Use This in Practice

1. Establish your probability estimate BEFORE examining market prices
2. Determine the break-even probability (identical to the current market quote)
3. When your estimate exceeds break-even beyond the bid-ask spread: compelling buy opportunity
4. When your estimate falls short of break-even: explore NO shares as an alternative
5. When your estimate aligns closely with break-even: pass — the edge is too thin

Position Size Calculator

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

• For a scenario 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 total capital)
• Half Kelly: 21% of total capital — always observe the 5% per-trade maximum regardless

FAQ

Is there an automated calculator for prediction market trades?

PolyGram's trading interface displays projected fill price, quantity of shares, and maximum return prior to you finalising the order. Performing your own EV analysis beforehand remains a best practice for informed decision-making.

How do spreads affect the return calculation?

Revise your entry price upwards by half the spread width. When YES carries a bid of 0.38 and ask of 0.42, your realistic entry sits around 0.42 rather than the midpoint of 0.40.