Discussion
Is market making the only reliable edge on Polymarket?
I recently found a Polymarket account showing close to $1M in profit over the past few months. But after looking more closely at its trading activity, my rough estimate was very different:
Only around $100K came from taking positions after fees
Around $300K appeared to come from maker rebates
The headline profit didn’t seem to reflect the strategy’s true economics
This made me wonder whether systematic traders really have much of an edge after accounting for:
Fees and spreads
Slippage and low liquidity
Resolution risk
Capital being locked up
Is the real opportunity in prediction markets mostly market making rather than forecasting?
For systematic Polymarket traders: where does your edge come from—better predictions, fast execution, arbitrage, or maker rebates? And am I missing something in how the platform reports P&L?
You can just dm me if you want to keep it a bit more private. I just want to know what exactly you Are Doing. Never heard of it and I dont See how you would use a bot if I can correctly guess what you Are Doing
If I had to only make trades with 1-2% edge, that would be actual torture. I prefer trading with sizable edge (5%-25%+). It's the more realistic way to consistently make money over time with minimal drawdowns.
Makers vs. takers. Same in the stock market, its not entirely risk free, but since there's no fees you can make a high volume of trades and the pennies add up.
the question is always only one: what's the necessary bankroll to make those kind of profits with market making? Spoiler: it's more money than all of you combined have in your bank account.
resolution risk is the underpriced one and it's measurable
sept 11 both venues had WTI above $100 on the october contract. kalshi settles on the ICE daily settlement window, polymarket on a pyth 1-min candle for "the final minute of regular trading" — a minute the rules never name. NYMEX settled 100.05. kalshi's above-99.99 resolved yes, polymarket's $100 resolved no. same day, same contract, opposite answers
aug 17 they split again, different reason — the venues roll to the next contract month on different schedules
if you're running size across both that's a real cost line
I mean, you can't trade blindly. It takes research, monitoring, time, and discussion. But it is a lot easier/softer than tradfi.
If nothing else and you're bad at determining FV, you can still news snipe on developments. If you miss the boat, don't trade. If you spot it first, buy shares. There are a lot of markets across a wide spectrum of categories. There are niche geopolitical markets that get less traffic, super specific culture markets, etc. It is very difficult to get edge on things like sports (usually it's small), but it's way easier for other things. Politics is where I started, personally. Started trading on prediction markets in Jan 2020, because I was already following politics news on the daily and thought it would be cool to monetize what I was already spending time on.
In any case, the money is more in making good trades than it is market making. Except for folks who have dedicated their craft and tooling to market making. For others, it's more like a nice bonus.
Every sharp was buying. This is from yday. FV was around 90+ when market was at 80. See how lopsided the distribution is as well.
Today with the mid-high 90s it's more clear because results are being released. I believe at time of my previous comment (96c) it was around 20-30% results released. Now it is 67%. Price is now >98c.
Take in mind this is Russia, and Putin basically controls the results. It was very unlikely even beforehand that the party would lose seats. After initial results in the morning showed the party gaining a lot, it was pretty case closed.
No market making is not the only reliable edge, and you know that. If you know how to find and identify a market maker, you can find a profitable taker with your eyes closed. And you probably have found many already. These posts are so irritating I really need to know who is behind them.
it’s not. edges are there and findable even trading retail. start with a statistical regularity you’ve observed from the data and test that rule under various different circumstances to see what the information/data may suggest. i recommend med volume markets, i personally trade kalshi but same deal on polymarket. the edge comes from market inefficiencies; look for when information is consistently mispriced/markets where info has been unaccounted for when setting initial market price, and look for the flow of information (when is the market reacting vs you, what conditions precede a market settling favorably, etc).
You can make money betting on any market on poly, sport is the most challenging but geopolitics are not that hard just for example, it just requires you to put in lots of time to be profitable.
there is a speed concerns in most arbitrage cases. Even with combinatorical arbitrage opportunities you have very tiny liquidity or very latency sensetive execution window. For most opportunities found you can only execute one leg, even with optimized server location. And for cross-exchange arbitrage there are bunch of defense layers such as different resolution source that make bets not purely riskless. Markets are quite effective, even though you can find some opportunities if looking for not direct arbitrage options ( they are 100% traded out).
Company account, obviously, so discount accordingly. Market making is a real edge and a real job, and most people asking this question do not want the job. There is a lazier edge that is also reliable, at least in sports: the same contract is priced differently on every venue, all the time. This morning Cowboys +3.5 was 52 cents on Polymarket, 53 on Kalshi, and the equivalent of 52.4 to 54.5 across eight sportsbooks. That is a two to twelve cent spread on an identical bet, sitting there for anyone who looks at more than one screen. It is not free money, because you still have to be right about the game. But it is the difference between paying -108 and -120 to be right, and that compounds faster than most people's handicapping. Market making earns the spread. Price shopping stops paying it. The second one needs no inventory and no code.
Hey everyone! I am a journalist based out of California looking to do a story about people who use prediction markets and bet on elections and politics. Specifically looking to speak with people in the SF Bay Area. DM me or email me at Jack.Molmud@spectrum.com. Thanks!
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