Key takeaway: For prediction market participants, liquidity stands as the paramount consideration. Markets with substantial liquidity provide narrow bid-ask gaps, rapid order execution, and reliable pricing. Polymarket dominates the sector with $1.5B+ in total traded volume; competing platforms typically fall well short of this liquidity benchmark.
Prediction market liquidity shapes your entire trading experience — from the cost at entry to your ability to unwind positions swiftly. Nevertheless, newcomers often prioritise market selection over liquidity assessment. This article clarifies why liquidity supersedes all other trading considerations.
What is liquidity?
Liquidity in financial markets refers to the ease with which you can acquire or dispose of an asset whilst keeping price movement minimal. Within prediction markets, three distinct dimensions define liquidity:
- Depth: The quantity of shares accessible at each price tier within the order book
- Spread: The distance separating the highest purchase offer and the lowest sale offer
- Volume: The total number of shares traded during a specific timeframe
A market offering 10,000 shares to purchase at 48 cents and 10,000 to sell at 50 cents demonstrates strong liquidity. Conversely, a market with merely 50 shares on each side and a 10-cent gap shows poor liquidity.
Why liquidity matters for traders
Insufficient liquidity erodes your returns through multiple channels:
- Wider spreads: You incur greater costs when establishing and closing trades
- Slippage: Substantial trades push pricing unfavourably for your position
- Trapped positions: Absence of buyers prevents you from exiting before market settlement
- Price inaccuracy: Thin markets produce prices that misrepresent genuine probabilities
How to measure prediction market liquidity
Prior to executing any trade, evaluate these metrics:
- Order book depth: PolyGram's depth chart allows you to assess buy and sell concentrations
- 24h volume: Elevated trading activity correlates with improved fill probability — orders execute more readily
- Number of unique traders: Markets attracting 100+ distinct participants typically possess adequate liquidity for standard retail positions
- Spread percentage: Target markets where the gap remains below 3 cents (3%) for economical trading costs
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 post matched buy and sell orders simultaneously, capturing the spread whilst supplying depth to the broader market. Polymarket compensates these participants through fee reductions and MATIC incentives. PolyGram's proprietary liquidity engine replicates Polymarket's order book architecture, guaranteeing PolyGram participants access to equivalent depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Restrict yourself to limit orders — avoid market orders when dealing with sparse order books
- Distribute sizable positions across multiple price points
- Exercise restraint: establish your desired price and await execution rather than accepting unfavourable fills
- Factor in timing — thin markets frequently gain liquidity as settlement approaches
Participate on the most liquid prediction market venue. Start trading on PolyGram →