Prediction markets continue to skyrocket in popularity, so traders are looking for the best prediction market strategies to use this year. Our prediction market strategies guide covers reading price movements, position sizing, and common mistakes to avoid with your Kalshi strategies and Polymarket strategies, as well as strategies on other platforms. We will also cover some frequently asked questions regarding prediction market strategies.
The topics below are strictly for informational purposes only and are not to be taken as financial advice. Prediction market trading should be used for entertainment purposes in a fun, responsible manner. Event contracts trading involves a risk of substantial loss and is not suitable for everyone.
Reading price movement
Understanding pricing in prediction markets is critical knowledge before deciding how to use trading credits claimed from offers like the Polymarket promo code or other platform welcome bonuses.
Prices are constantly changing on prediction markets, and understanding why those changes are happening is one of the most important prediction market strategies. The price represents the implied probability of an outcome, but it can change based on new information, liquidity, large orders or changing sentiment. For example, a large price shift with high volume most likely represents a genuine change in probability, while a large price shift with low volume could simply be a low-liquidity adjustment.
Market volume is crucial to distinguish between consensus agreement and one trade. If there is less than $10,000 traded on a market, even small trades can shift the price. However, a liquidity of $10,000-$50,000 is moderate volume that gives you a much better chance of finding a desired price with your Kalshi strategy.
Anything above that range is generally liquid enough for most traders to place orders without much impact on the market. It is important to use price movement as a research tool, but it is also important not to chase price moves blindly. Those moves sometimes happen due to low volume or speculation rather than new information or consensus trading.
A real-world example of this concept would be a college football game between two small-market teams with low volume being traded. If one team's event contract price goes from $0.40 to $0.50 an hour before kickoff, it could be due to a single trade in a small market rather than a large sum of money shifting the implied probability.
But if there is an NFL primetime game with millions of dollars traded and the same price shift happens, it is much more likely to be caused by a genuine change in probability due to injury news, weather or another crucial factor.
Availability of sports prediction markets
Some brands will not offer sports prediction markets on their platforms if they also operate a licensed sportsbook in a state that has legalized regulated sports betting. For example, the FanDuel Predict promo code is only available to eligible new users in the states where it offers sports markets (AL, AK, CA, DE, FL, GA, HI, ID, MN, NE, NM, ND, OK, RI, SC, SD, TX, UT).
Market availability varies by state and platform.
Common mistakes to avoid
Keep these things in mind before signing up for prediction market sign-up bonuses, including the latest Kalshi promo code.
- Chasing a price: It is important to avoid buying a contract after it has moved significantly, as there might not be any value remaining at the new price.
- Ignoring market liquidity: Always check trading volume and the order book before placing a trade, as this shows traders how much volume is available at different prices.
- Misreading settlement wording across platforms: Two markets that appear to be for the same event might have different grading criteria, so it is critical to read the market rules.
- Ignoring fees: A pricing discrepancy is not the only factor. Trades involve commissions, settlement fees and withdrawal costs.
- Trading too much on a single position: Conservative position sizing is mandatory for maintaining a bankroll and surviving inevitable losing stretches with any Kalshi strategy or Polymarket strategy.
- Letting emotions dictate decision-making: Successful trading requires a consistent long-term approach that is not hindered by chasing losses or making emotional decisions based on recent results.
- Not utilizing Responsible Trading Toolkits: Prediction market platforms often include tools to help you trade responsibly, including deposit limits, session time limits, timeouts, self-exclusion, closing your account and contact helplines.
If you're still unsure how prediction markets work, you can always contact customer support on any app or site and ask additional questions.
Frequently asked questions
What strategy should beginners start with?
Beginners should focus on markets they understand while keeping their positions small as they learn more advanced trading strategies.
Can I use the same strategy across different operators?
While the same general strategies apply across all trading platforms, it is also important to read market rules and understand the nuances of each operator, including liquidity, fees, and settlement rules.
Can prediction market strategies be automated?
Some strategies can be automated, such as data collection, price monitoring and alerts, with some advanced systems making trades automatically. However, automated trading still requires monitoring.
Does the same strategy work for every type of market?
Some strategies are applicable across multiple markets, but some strategies vary by market depending on factors like liquidity and market efficiency.
How do fees work on prediction market platforms?
There are two types of fees: deposit fees and trading fees. Some prediction market platforms charge up to 2% for depositing money, depending on the method, but most allow online bank transfers with no deposit fees. Trading fees happen each time a trade is executed. Kalshi's standard trading fees range from $0.07 to $1.75 per 100 event contracts. DraftKings Predictions charges $0.01 for each event contract bought or sold priced from $0.01 – $0.19, $0.02 for contracts priced from $0.20 – $0.96, and $0.01 for contracts priced from $0.97 – $0.99. You can always verify the amount on a brand's website before claiming prediction market promos and making trades.
Trading involves substantial risk of loss and is not suitable for everyone. Past performance is not indicative of future results. Participation in prediction markets is subject to applicable eligibility requirements. Availability may be restricted or prohibited in certain jurisdictions and participants are responsible for ensuring their participation complies with applicable laws and regulations in their jurisdiction. Prediction market content is not intended for individuals located in jurisdictions where they are prohibited. See the NCPG's Financial Trader Health and Safety Initiative for more information.
Prediction markets should be used for entertainment purposes, in a fun, responsible manner. Concerned about your trading behavior? Call or text 1-800-MY-RESET.
