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

At its core, every prediction market trade hinges on a straightforward expected value calculation. Master this mathematics and you'll never place a trade without clarity — you'll understand precisely what success rate you require, the exact probability threshold needed, and whether your odds justify the wager.

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 capital 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)

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

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

How to Use This in Practice

1. Always establish your own probability estimate BEFORE executing any trade
2. Determine the break-even probability (which equals the market price)
3. When your estimate exceeds break-even by a margin wider than the spread: this signals a compelling opportunity
4. When your estimate falls below break-even: explore NO shares as an alternative
5. When your estimate aligns closely with break-even: abstain — the edge is too thin

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 apply the 5% per position ceiling

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares allocated, and total profit potential directly within the trade confirmation screen before you commit. Performing your own EV analysis beforehand remains an essential discipline.

How do spreads affect the return calculation?

Incorporate the spread into your effective entry cost by adding one half of the quoted spread width. Should YES display bid=0.38, ask=0.42, your realistic entry point becomes approximately 0.42 rather than 0.40.