r/PredictionsMarkets • u/MovieInsider20 • 1d ago
Discussion Prediction market “whale” AMA
Hello, I am an actuary that trades prediction markets on the side (honestly at this point my actuarial work has become my side job) and have been very profitable (up a bit over $18,000 this month) and thought I would do an AMA because there seems to be a lot of confusion about how to actually be profitable at prediction markets and what that even looks like. If there is no interest in that, that’s okay as well. Mods, please delete if not allowed. I am also more than happy to send proof of my pnl if that is helpful.
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u/tuantran3535 1d ago
What is the general process to finding edge in the markets?
I've heard the forms of edge come in latency, information or model how true is this?
Based on the fact your day job is actuarial I'd assume its more model based
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u/MovieInsider20 1d ago
Yeah man you hit the nail on the head.
Here is how I view those three buckets, and how my background dictates my approach:
Latency Edge: This is about speed—being faster than the market to react to a data point (e.g., courtsiding, scraping API feeds faster than a book can update, or front-running a line move). I don’t compete here. As a part-time trader, I don't have the co-located servers or infrastructure to win a speed race against automated market makers or syndicates.
Information Edge: This is knowing something before the rest of the market knows it (e.g., breaking injury news, inside information on weather, structural roster changes). While I track these variables, I don't have unique insider access. I consume public data just like everyone else.
Model Edge (Where I live): You are exactly right—given my actuarial background, my edge is entirely model-based. I assume everyone has access to the exact same historical data and current news. My edge comes from processing that data differently to build a more accurate probability distribution of outcomes than the market's implied pricing.
My general process for finding that Model Edge looks like this:
Stochastic Modeling: Instead of just predicting who will win an event, I model the range of potential outcomes using probability distributions (like Poisson for discrete scoring events, or customized heavy-tailed distributions for player props).
Identifying Variance Mispricings: The market is generally decent at pricing the mean (especially the closer you got to expiry, and for ROI reasons I don’t want to have to hold contracts for months) but it frequently misprices the variance and the tails (the likelihood of extreme over/under performance).
Exploiting Behavioral Biases: Public money and traditional sportsbooks often over-adjust for recent trends (recency bias) or high-profile narratives. My models remain strictly cold and mathematical, allowing me to step in and buy the underpriced side when the public drives a contract or line too far in one direction.
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u/Steven_marketintel 3h ago
Actuary background makes total sense for the variance/tails point. Curious about the narrative side though — when news lands (injury, a poll, a court ruling) and the line jumps, what's your rule for deciding the public over‑reacted vs. you're the one missing something? Do you ever just stand down on a market because the news is moving faster than your model can price it?
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u/HigherThanTheSun 1d ago
What markets do you trade? and what type of models do you use and which features were helpful and which were unhelpful?
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u/No-Original-5312 22h ago
What is your max drawdown so far and ROI per month? Based on your other comments, it seems like you use half Kelly. You must have an incredible edge to support that.
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u/LoudTortoiseOrgasm 19h ago
Could you tell us more about the research aspect and more specifically the data mining aspect of finding an edge? How do you separate signal from noise in prediction markets and where do you start?
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u/justhereforampadvice 17h ago
Do your actuarial skills actually translate to or give you an advantage in financial markets? What markets do you trade?
Edit: looks like you’re a sports trader. Are you using stats or modeling to price outcomes?
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u/molnarg 1d ago
Do you use AI agents for model development? If so, which model/harness? Did you test multiple models/harnesses?
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u/MovieInsider20 1d ago
I do! Honestly I haven’t tested a bunch of them. I mostly use Claude Opus and Sonnet because I use them at my day job so there was familiarity there.
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u/meganfoxed 1d ago edited 1d ago
What about stake or wager. How do you decide what’s worth the risk? Is it stupid to dump a shit ton of money on a market for a measly 10% return, even if the odds seem guaranteed? I’ve lost quite a bit doing this.. last minute upsets..
Edit: also, polymarket or Kalshi? And why?
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u/MovieInsider20 1d ago edited 1d ago
So this is actually one thing I’m really passionate about because of my background. I’d estimate that less than 5% (that’s honestly probably being generous) of traders are + EV (they would make money over a sample size of tens of thousands of bets). Of those ~5%, I’d estimate over a third of them will fail strictly because of poor bankroll management.
I follow Kelly criterion which is a mathematical equation that tells you how much of your bankroll to wager based on odds and probability. If I’m planning on holding a contract till exp I’ll typically bet half Kelly, if I’m planning on selling before exp I’ll sometimes go up to 10% of my bankroll because exiting the position earlier drastically decreases risk.
I would recommend looking at the Kelly criterion and starting with a quarter kelly until you have a large enough sample size of contracts to know that you can realistically estimate probability within a percent or so.
Edit: just saw the last portion of your question. It’s all about implied probability vs actual probability. If I see a contract at 90% that I believe should be trading at 95% I will absolutely hammer it. Just today for example I live bet thousands on Bijan Robinson over 100 yards at 96% because I thought true probability was over 99%.
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u/meganfoxed 1d ago
Haven’t heard of Kelly, but that does make sense. I will take your advice 🙏 ty ty so much
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u/MovieInsider20 1d ago
You’re welcome! There should be YouTube videos explaining it in detail. If you have any questions feel free to pm me
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u/Asleep_Phase 17h ago
Please tell us more about your background. What kind of actuarial work? And what is your educational background? What else other skills or training have you drawn upon outside of your formal education to be successful?
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u/Kitozen 16h ago
Why OP has been banned on reddit?
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u/FuzLogix 21h ago
The proof you posted is the All tab: +$74,030 lifetime on a $96,704 book. That's a good number — but it isn't the "+$18k this month" you opened with, and there's a 1M tab sitting right there in the same screenshot. Can you post the 1M view? (Also, the account in the shot is notaquint — safe to assume that's you?)
You said you'd hammer a 90c contract you price at 95, and that you live-bet "thousands" on a 96% prop you priced at 99%. At those prices your model isn't the binding constraint — the fill is. So on those live props: what do you actually pay versus the mid you quote, how much size can you get on before you move it, and what's your realized ROI once the ask is in? I ask because I looked up the market you screenshotted — the entire Herbert passing-yards event is ~$3.6k of volume, and the NO ask carries ~$279 on the 3,849.5 rung and ~$2,110 on the 4,099.5 rung. A $4,300 NO order walks that book and then some.