In this guide
What separates traders who generate steady returns from those treading water (or worse) is rarely about forecasting skill alone—it's fundamentally about discipline and methodology. This guide outlines the core habits that seasoned professionals follow in their daily operations.
Before Entering Any Position
- Articulate your edge: What insight gives you an advantage that the broader market hasn't priced in? Commit this to a single sentence before deploying capital.
- Check the spread: Does the gap between buy and sell prices allow your edge 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: Establish your forecast in isolation, away from current market quotations, to sidestep the anchoring trap.
- Calculate position size: Apply the half-Kelly criterion. Limit each trade to no more than 5% of total capital, regardless of how confident you feel.
During Position Management
- Update on new information: When significant events unfold (speeches, economic figures, breaking news), reassess your odds and decide whether to increase, maintain, or reduce exposure.
- Don't check obsessively: Intraday swings are largely noise. For markets with longer timeframes, a daily check-in suffices; hourly monitoring breeds reactive mistakes.
- Pre-define your exit criteria: Establish your loss threshold and exit signal before you commit funds, eliminating emotion from the exit decision.
After Each Market Resolves
- Record everything: Log the entry date, market identifier, your forecast odds, the price you paid, the final result, and your gain or loss.
- Score your calibration: Did events you rated at 70% confidence actually occur 70% of the time across your sample?
- Categorize by market type: Which domains—elections, digital assets, sports—show your strongest track record?
- Review your losers honestly: Did you execute a sound strategy that happened to lose, or did flawed reasoning lead to the loss?
Weekly Review Routine
- Reconcile all open positions and cumulative returns
- Calculate rolling 30-day and 90-day Brier scores
- Scan the calendar for forthcoming pivotal moments (central bank announcements, ballot dates, major economic indicators)
- Spot any recurring patterns or blind spots in your recent decisions
- Adjust your portfolio mix if the data warrants it
FAQ
- How often should I review my prediction market performance?
- A weekly cadence works best for the majority of participants. Checking daily encourages excessive trading; waiting a full month risks missing signals to adjust course.
- What software should I use to track prediction market trades?
- PolyGram's integrated portfolio dashboard offers a solid foundation. For deeper statistical work, export your trade log as CSV and process it through Excel, Google Sheets, or a Python script.
- How many markets should I research before entering each week?
- Depth of analysis outweighs breadth. Thoroughly investigating 3-5 opportunities yields better results than superficially scanning 20.