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

Every trade in a prediction market boils down to a calculation of expected value. Mastering this framework ensures you approach each position with clarity — you'll understand precisely what success rate you require, at what odds, and which threshold separates profit from loss.

Basic Return Calculation

When you acquire a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage gain should YES resolve affirmatively
• Loss: 100% of your initial capital if NO resolves instead
• Break-even probability: P (the quoted market price doubles as your break-even threshold)

Worked 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)

Suppose you commit $100 to a YES position priced at $0.40, and your personal estimate of likelihood stands at 55%:

• Payout if YES occurs: $150 (you receive $250 total, having invested $100)
• Payout if NO occurs: -$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 forecast FIRST
2. Determine the break-even probability (which mirrors the market price)
3. If your forecast exceeds break-even by more than the bid-ask spread: strong opportunity
4. If your forecast falls short of break-even: examine NO shares as an alternative
5. If your forecast aligns closely with break-even: abstain — edge is insufficient

Position Size Calculator

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

• For a scenario 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 total capital)
• Half Kelly: 21% of total capital — apply the 5% per-trade maximum regardless

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected entry price, quantity of shares, and maximum return directly within the trading interface prior to execution. Independent EV analysis remains useful for evaluating opportunities before you transact.

How do spreads affect the return calculation?

Incorporate the spread into your effective entry cost by adding half its width. When YES trades at bid=0.38, ask=0.42, your realistic entry point is approximately 0.42 rather than 0.40.