In this guide
Key takeaway: Liquidity stands as the paramount 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 consensus. Polymarket dominates this space with over $1.5B in total trading volume; rival platforms typically operate at substantially lower levels of activity.
Prediction market liquidity shapes your entire trading experience — influencing both the cost at which you transact and your ability to unwind positions swiftly. Nevertheless, newcomers often prioritise market selection over liquidity considerations. This article clarifies precisely why liquidity should be your primary concern.
What is liquidity?
Liquidity in financial markets refers to the ease with which you can acquire or dispose of an asset without materially altering its price. Within prediction markets, liquidity breaks down into three distinct elements:
- Depth: The quantity of shares available at various price points throughout the order book
- Spread: The distance separating the highest purchase offer (bid) from the minimum asking price (ask)
- Volume: The total quantity of shares transacted during a specified timeframe
A market offering 10,000 shares at a 48-cent bid and 10,000 shares at a 50-cent ask demonstrates strong liquidity. Conversely, a market with merely 50 shares on either side and a 10-cent spread exhibits poor liquidity.
Why liquidity matters for traders
Insufficient liquidity erodes your profitability through multiple channels:
- Wider spreads: You incur higher costs when opening and closing trades
- Slippage: Substantial orders push the market price unfavourably
- Trapped positions: Absent sufficient buyers, you may find yourself unable to liquidate holdings before market settlement
- Price inaccuracy: Thin markets produce prices that diverge from genuine probability assessments
How to measure prediction market liquidity
Prior to executing any trade, examine the following metrics:
- Order book depth: PolyGram's depth chart allows you to observe the concentration of buy and sell interest
- 24h volume: Elevated trading activity correlates with improved order fulfilment odds
- Number of unique traders: Markets attracting 100 or more distinct participants generally possess sufficient liquidity for standard retail positions
- Spread percentage: Target markets where the spread remains below 3 cents (3%) to minimise transaction expenses
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 purchase and sale orders, capturing the spread differential whilst supplying depth to the broader trading community. Polymarket attracts these participants through fee reductions and MATIC incentive schemes. PolyGram's proprietary liquidity engine replicates Polymarket's order book structure, guaranteeing that PolyGram participants access identical market depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Restrict yourself to limit orders — avoid market orders in thin conditions
- Divide substantial positions across multiple price tiers
- Demonstrate patience: submit your preferred price and allow time for execution rather than accepting unfavourable fills
- Account for timing dynamics — markets often deepen as they approach expiration
Trade on the most liquid prediction market platform. Start trading on PolyGram →