Key terms for prediction market trading.
Buying opposite sides of the same event on different platforms when the combined cost is less than $1.00, guaranteeing profit regardless of outcome.
The return on an investment projected over a full year. A 3% arb that resolves in 5 days has a much higher APY than a 3% arb resolving in 60 days.
The total amount of money you've set aside for trading. Position sizes should be calculated as a percentage of your current bankroll.
A market with exactly two outcomes (YES and NO). Most prediction market questions are binary.
The final odds at a sportsbook when betting closes (usually at game time). Pinnacle's closing line is considered the most accurate probability estimate available.
The matching system used by Polymarket where buyers and sellers post limit orders. Trades execute when bid and ask prices cross.
When multiple high-performing wallets take the same position on a market within a short time window. A strong directional signal.
The difference between the true probability of an outcome and the price you're paying. A 5 percentage point edge means you're buying something at a price that underestimates its true probability by 5%.
+EV means profitable on average; -EV means losing on average. The average profit or loss per trade if repeated many times.
Betting the exact amount the Kelly Criterion formula recommends. Aggressive and volatile. Most professionals use half-Kelly or quarter-Kelly instead.
Betting half of what the full Kelly Criterion recommends. Sacrifices ~25% of growth rate but dramatically reduces volatility and drawdown risk.
The probability implied by a market price. On Polymarket, a YES share at $0.62 implies a 62% probability.
A formula that calculates the optimal bet size based on your edge and the odds. Maximizes long-term bankroll growth rate.
How much money is available to trade at the current price. Low liquidity means you can't execute large positions without moving the price against yourself.
A participant who provides liquidity by posting both buy and sell orders. They profit from the spread between bid and ask prices.
A bet on which team/player wins. No point spread. Equivalent to a prediction market’s YES/NO on "Will X win?"
The largest prediction market by volume. Runs on the Polygon blockchain using USDC. Covers sports, politics, crypto, and more.
The specific rules that determine how a market outcome is decided. Critical for cross-platform arbs — different platforms may define the same event differently.
Net profit divided by cost, expressed as a percentage. A $0.03 profit on a $0.97 cost is a 3.1% ROI.
A sportsbook that accepts large bets from professional bettors without limiting or banning them. Their lines are considered the most accurate.
The difference between the expected price and the actual execution price. Occurs in thin/illiquid markets when your order moves the price.
A price that hasn't been tested by professional bettors. Polymarket's sports lines are generally "softer" than Pinnacle's because the user base is retail-heavy.
The fee charged when you accept an existing order (trade at market price). Usually higher than maker fees.
The margin a sportsbook builds into its odds. If true odds are 50/50, a book might price both sides at -110, keeping the ~4.5% difference as profit.
The total dollar amount traded on a market. Higher volume generally means more reliable pricing and better liquidity.
A wallet or trader with a large bankroll and significant trading history. On Polymarket, whales can be identified by their on-chain activity.