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

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

Basic Return Calculation

For a YES share acquired at price P:

• Win return: (1 - P) / P × 100% = your percentage profit if YES wins
• Loss: 100% of your stake if NO wins
• Break-even probability: P (the market price IS the break-even probability)

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%:

• Win amount if YES: $150 (receive $250, paid $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. Before committing capital, establish your probability estimate FIRST
2. Calculate break-even probability (= market price)
3. If your estimate > break-even by more than the spread: strong buy signal
4. If your estimate < break-even: consider NO shares instead
5. If your estimate ≈ break-even: skip — insufficient edge

Position Size Calculator

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

• For a trade 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 cap at 5% per position rule

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares, and maximum return directly within the trade confirmation screen before you commit. Performing your own EV assessment beforehand remains essential for sound decision-making.

How do spreads affect the return calculation?

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