In this guide
Key takeaway: Liquidity stands as the cornerstone metric for anyone trading prediction markets. When liquidity runs deep, traders benefit from compressed bid-ask spreads, rapid order execution, and market prices that accurately reflect true odds. Polymarket dominates the space with over $1.5B in total traded volume; rival platforms typically operate at substantially lower activity levels.
Prediction market liquidity shapes your entire trading experience — affecting both the rates at which you transact and your ability to unwind exposure rapidly. Regrettably, newcomers often prioritise available contract selection over liquidity depth. This article clarifies why liquidity should be your primary consideration.
What is liquidity?
Within financial markets, liquidity reflects the ease with which you can acquire or dispose of an asset without materially shifting its market price. Prediction markets break this concept into three measurable dimensions:
- Depth: The aggregate quantity of contracts available at successive price tiers within the order book
- Spread: The distance separating the highest bidding price from the lowest asking price
- Volume: The total number of contracts transacted throughout a specified timeframe
A market displaying 10,000 contracts bid at 48 cents alongside 10,000 offered at 50 cents exhibits robust liquidity. Conversely, a market with merely 50 contracts on either side separated by a 10-cent gap demonstrates poor liquidity conditions.
Why liquidity matters for traders
Insufficient liquidity erodes profitability through multiple mechanisms:
- Expanded spreads: Transaction costs rise when entering and closing trades
- Slippage: Substantial order sizes push pricing unfavourably against your position
- Stuck positions: Absence of willing buyers may prevent you from liquidating holdings before market settlement
- Distorted valuations: Thin markets frequently misprice contracts relative to underlying probabilities
How to measure prediction market liquidity
Prior to executing any trade, evaluate these key metrics:
- Order book depth: Utilise PolyGram's depth visualisation tools to assess cumulative buy and sell interest
- 24h volume: Elevated trading activity typically correlates with improved fill likelihood
- Number of unique traders: Markets attracting 100+ distinct participants generally possess sufficient depth for standard retail positions
- Spread percentage: Target markets where the bid-ask gap stays below 3 cents (3%) to optimise transaction efficiency
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 offers, capturing the spread whilst supplying depth to the broader trading community. Polymarket incentivises this participation through fee reductions and MATIC token distributions. PolyGram's proprietary liquidity aggregation system replicates Polymarket's full order book, guaranteeing PolyGram participants access to identical market depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Restrict yourself to limit orders — avoid crossing the spread in sparse markets
- Divide sizable positions across multiple price points
- Exercise patience: submit your desired price and await execution rather than accepting unfavourable fills
- Assess temporal dynamics — thin markets frequently deepen substantially as contract expiration approaches
Trade on the most liquid prediction market platform. Start trading on PolyGram →