In this guide
What separates traders who generate steady returns from those treading water hinges on disciplined methodology rather than forecasting ability alone. This guide outlines the core routines that institutional and serious independent traders follow throughout their trading day.
Before Entering Any Position
- Articulate your edge: What insight separates your view from the consensus? Commit this reasoning to a single sentence prior to initiating any trade.
- Check the spread: Does the distance between bid and ask prices allow your advantage to overcome slippage and fees?
- Assess liquidity: Will you be able to unwind this position at a reasonable price if circumstances demand it? Review the depth of available orders.
- Set your probability independently: Develop your forecast in isolation before observing quoted market levels, thereby protecting yourself from anchoring.
- Calculate position size: Apply the half-Kelly framework. Never risk beyond 5% of total capital on any single wager, irrespective of confidence level.
During Position Management
- Update on new information: As significant developments unfold (speeches, economic statistics, breaking news), recalibrate your forecast and determine whether to expand, maintain, or close your exposure.
- Don't check obsessively: Intraday swings constitute statistical noise. For markets spanning weeks or months, a daily check suffices; hourly monitoring breeds poor decisions.
- Pre-define your exit criteria: Establish in advance the price level or condition triggering your exit if the thesis proves incorrect. This removes emotion from the decision.
After Each Market Resolves
- Record everything: Log the settlement date, market identifier, your stated probability, entry price, final outcome, and realised gain or loss.
- Score your calibration: Did events you assigned 70% likelihood to occur in roughly 70% of instances?
- Categorize by market type: Do your returns vary meaningfully across geopolitical, digital asset, and athletic prediction categories?
- Review your losers honestly: Did you lose because your methodology was flawed, or did sound reasoning simply encounter an unlikely outcome?
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 works best for the majority of participants. Evaluating every single day encourages excessive turnover; waiting a full month risks missing critical adjustment windows.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio management system provides a solid foundation. For deeper statistical work, export your transaction history as CSV and process it through Excel, Google Sheets, or a Python environment.
- How many markets should I research before entering each week?
- Depth of analysis matters far more than breadth. Spending substantial time on 3-5 carefully selected opportunities tends to yield better results than cursory examination of 20 different markets.