In this guide
Key takeaway: Liquidity stands as the cornerstone consideration for anyone trading prediction markets. When liquidity runs deep, you benefit from compressed bid-ask spreads, rapid order execution, and market prices that genuinely reflect underlying probabilities. Polymarket dominates the sector with cumulative trading volumes exceeding $1.5B; rival platforms typically operate at substantially lower activity levels.
Prediction market liquidity shapes nearly every aspect of your trading journey — influencing both the cost at which you transact and your ability to unwind positions swiftly. Regrettably, newcomers often prioritise which markets exist rather than assessing their trading depth. This guide explores why liquidity eclipses all other considerations.
What is liquidity?
Within financial trading, liquidity refers to the ease with which you can purchase or sell a given asset whilst maintaining price stability. For prediction markets in particular, liquidity comprises three distinct dimensions:
- Depth: The quantity of shares available at successive price points throughout the order book
- Spread: The distance separating the highest purchase offer (bid) from the lowest sale offer (ask)
- Volume: The total number of shares transacted during a specified timeframe
A market displaying 10,000 shares offered at 48 cents and 10,000 shares requested at 50 cents demonstrates strong liquidity. By contrast, a market with merely 50 shares on either side separated by a 10-cent gap exhibits poor liquidity.
Why liquidity matters for traders
Insufficient liquidity erodes your profitability through multiple channels:
- Wider spreads: Transaction costs increase both when entering and exiting trades
- Slippage: Substantial orders push prices unfavourably relative to your position
- Trapped positions: Absence of willing counterparties may prevent you from liquidating holdings before market settlement
- Price inaccuracy: Sparse trading activity causes quoted prices to diverge from genuine probability assessments
How to measure prediction market liquidity
Prior to executing any trade, examine these key metrics:
- Order book depth: On PolyGram, leverage the depth chart to observe concentrations of buy and sell interest
- 24h volume: Elevated trading activity typically correlates with improved order fulfilment rates
- Number of unique traders: Markets attracting 100+ distinct participants generally provide sufficient depth for standard retail positions
- Spread percentage: Target markets maintaining spreads below 3 cents (3%) to minimise transaction friction
Which platforms have the most liquidity?
| Platform | Cumulative volume | Avg. spread |
| Polymarket | $1.5B+ | 1-3 cents |
| Kalshi | $500M+ | 2-5 cents |
| Betfair Exchange | N/A (sports-focused) | 1-2% on sports |
| Augur/Azuro | $50M+ | 5-15 cents |
How market makers create liquidity
Institutional liquidity providers simultaneously post competing bids and offers, generating profit through the spread differential whilst furnishing trading counterparties with execution opportunities. On Polymarket, these specialists receive incentives including fee reductions and MATIC token rewards. PolyGram's proprietary liquidity engine synchronises with Polymarket's order flow, guaranteeing PolyGram participants access to equivalent order book depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Restrict yourself to limit orders — avoid market orders when order books are sparse
- Distribute sizable orders across multiple price tiers
- Exercise patience: establish your desired price and await a match instead of accepting unfavourable immediate fills
- Account for temporal dynamics — sparse markets frequently attract greater participation as settlement approaches
Trade on the most liquid prediction market platform. Start trading on PolyGram →