In this guide
The gap between traders who generate steady returns and those who struggle to break even typically hinges on disciplined methodology rather than forecasting ability alone. This guide outlines the core routines that successful professionals follow in their daily trading operations.
Before Entering Any Position
- Articulate your edge: What insight do you possess that the broader market has overlooked? Commit this to a single written statement prior to initiating any trade.
- Check the spread: Does the gap between bid and ask prices remain sufficiently tight that your informational advantage justifies the cost of execution?
- Assess liquidity: Will you be able to unwind this position at a reasonable price if circumstances demand an exit? Examine the depth of available orders.
- Set your probability independently: Develop your own forecast before consulting market quotations to prevent anchoring to prevailing sentiment.
- Calculate position size: Apply the half-Kelly criterion. Never risk more than 5% of total capital on any single position, regardless of confidence level.
During Position Management
- Update on new information: When significant events materialise (public speeches, economic indicators, breaking news), reassess your forecast and determine whether to increase exposure, maintain your stake, or liquidate.
- Don't check obsessively: Intraday volatility represents statistical noise rather than meaningful repricing. Monitor your holdings on a daily cycle for markets with extended timeframes.
- Pre-define your exit criteria: Establish the price level at which you will close the position if your thesis proves incorrect. Lock in these thresholds before deployment to eliminate emotional interference.
After Each Market Resolves
- Record everything: Document the settlement date, market identifier, your forecast estimate, your entry price, final outcome, and realised gain or loss
- Score your calibration: Did your forecasts assigned 70% probability materialise at approximately that frequency?
- Categorise by market type: Does your track record show stronger performance in certain domains such as political, digital asset, or athletic prediction markets?
- Review your losers honestly: Did the loss stem from flawed reasoning or from sound methodology undermined by unfavourable randomness?
Weekly Review Routine
- Reconcile all positions and P&L
- Calculate rolling 30-day and 90-day Brier scores
- Review upcoming calendar events (Fed meetings, elections, major data releases)
- Identify any systematic biases in your recent trading
- Rebalance portfolio allocation if needed
FAQ
- How often should I review my prediction market performance?
- A weekly cadence suits the majority of participants. Daily scrutiny encourages excessive trading activity; monthly intervals allow problematic patterns to persist unchecked.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio management system provides a solid foundation. For more sophisticated reporting, export your transaction history as CSV and process it through spreadsheet applications or programming languages like Python.
- How many markets should I research before entering each week?
- Depth of analysis outweighs breadth of coverage. Rigorous examination of 3-5 opportunities typically yields superior returns compared to superficial review of dozens of markets.