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

Every prediction market trade boils down to a straightforward expected value calculation. Mastering this mathematics ensures you approach each position with clarity — you'll understand precisely what success rate you require, at what odds, and what threshold separates profit from loss.

Basic Return Calculation

When you acquire a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage gain should YES resolve affirmatively
• Loss: 100% of your capital if NO resolves instead
• Break-even probability: P (the market price itself represents 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)

Suppose you commit $100 to YES at $0.40, and you assess the true probability at 55%:

• Payout if YES: $150 (you receive $250 total, having risked $100)
• Payout 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. Determine break-even probability (which equals the market price)
3. If your estimate exceeds break-even by more than the spread: strong buy opportunity
4. If your estimate falls below break-even: evaluate NO shares as an alternative
5. If your estimate aligns with break-even: pass — insufficient edge exists

Position Size Calculator

Using 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 bankroll)
• Half Kelly: 21% of bankroll — still enforce the 5% per position maximum

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, shares obtained, and maximum profit in the trade interface prior to execution. Independent EV analysis remains essential for evaluating opportunities beforehand.

How do spreads affect the return calculation?

Modify your effective purchase price by incorporating half the spread width. If YES trades with bid=0.38 and ask=0.42, your realistic entry point is approximately 0.42 rather than 0.40.