In this guide
What separates traders who generate steady returns from those treading water or facing losses is rarely about forecasting alone—it's fundamentally about discipline and methodology. This guide outlines the core protocols that seasoned professionals follow during every trading session.
Before Entering Any Position
- Articulate your edge: What insight do you possess that the broader market has overlooked? Commit this to a single sentence before you commit capital.
- Check the spread: Does the gap between bid and ask prices leave enough room for your advantage to overcome trading friction?
- Assess liquidity: Will you be able to unwind this position at a reasonable price if circumstances demand it? Examine the depth of available orders.
- Set your probability independently: Develop your forecast in isolation, prior to examining what others are pricing, to guard against anchoring.
- Calculate position size: Apply the half-Kelly criterion as your sizing framework. Never risk more than 5% of your total capital on any single trade, regardless of confidence level.
During Position Management
- Update on new information: As material events unfold (speeches, economic statistics, announcements), refresh your forecast and determine whether to expand, maintain, or close your stake.
- Don't check obsessively: Intraday price swings are largely random noise. For markets with extended timeframes, a daily review suffices; hourly monitoring breeds poor decisions.
- Pre-define your exit criteria: Establish your stop-loss and take-profit levels before you enter, removing emotion from the exit decision.
After Each Market Resolves
- Record everything: Timestamp, market identifier, your forecast, entry price, final outcome, and realised gain or loss
- Score your calibration: Did events you assigned 70% confidence to occur 70% of the time in practice?
- Categorize by market type: Are your returns stronger in certain domains—elections, digital assets, athletics—than others?
- Review your losers honestly: Did the loss stem from flawed reasoning or simply from variance despite sound methodology?
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 traders. Reviewing daily tends to encourage excessive trading; waiting a full month risks missing critical adjustment windows.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio management tools provide a solid foundation. For more granular reporting, export your transaction history as CSV and process it through spreadsheet applications or custom scripts.
- How many markets should I research before entering each week?
- Depth of analysis outweighs breadth. Conducting rigorous due diligence on 3-5 opportunities typically yields better results than superficial examination of 20.