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

Every prediction market trade hinges on a simple expected value computation. Mastering this calculation ensures you approach each position with clarity — you'll understand precisely what success rate you require, the threshold probability needed, and whether your edge justifies the risk.

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 at $0.40, where you estimate 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 every trade, write 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 settlement price, quantity of shares, and final payout value directly in the order confirmation screen before you commit. Performing your own EV assessment beforehand remains a prudent step for trade validation.

How do spreads affect the return calculation?

Modify your actual entry price by incorporating half the bid-ask spread. When YES trades at bid=0.38, ask=0.42, your true cost basis sits closer to 0.42 rather than 0.40.