Prediction Market Edge & Kelly Position Calculator

Evaluate binary prediction contracts from Polymarket, Kalshi, and PredictIt. Compare market implied odds against your personal forecast, quantify your mathematical edge, and size contracts safely via Kelly Criterion.

Example Scenarios:

Contract Parameters

Binary Yes/No

Contract / Event Name

Market Contract Price (Implied Odds) 83¢ (83.0%)

Price of 1 YES share. Implies market probability. NO costs (100 - YES)¢.

Target Side to Trade

Your Calibrated True Probability 62.0%

Your assessment of the genuine probability that YES occurs.

Total Risk Bankroll $10,000

USD

Total liquidity dedicated to prediction contracts.

Platform Fee / Slippage 2.0%

Polymarket swap fee or estimated maker/taker impact.

Default Kelly Fraction

Position Edge & Expected Value

Calculating...

            Expected Value (EV)
            -23.6%
            Loss expected per $1.00 staked
          

Net Mathematical Edge -21.0% Your belief vs market price

            Recommended Allocation
            $0.00
            0 shares • 0.0% of bankroll
          

Payout Multiple on Win 1.20x Net payoff after 2% fee

Kelly Model	Bankroll Fraction	Dollar Size	Contracts	Expected Profit

Scenario Profit / Loss Distribution Outcome comparison

Mathematical Framework for Binary Contracts

Binary Contract Pricing

On Polymarket, prices range between $0.01 and $0.99. A contract trading at 83¢ implies an 83% consensus probability of occurring. The payout upon favorable resolution is exactly $1.00 per share, yielding a net gain of $(1.00 - price).

Quantifying the True Edge

Your edge is defined as True Probability - Implied Market Odds. If the consensus sits at 83% but your domain modeling implies 62%, buying YES carries a severely negative expectation (-21% raw edge), whereas buying NO at 17¢ provides a +21% edge.

The Kelly Criterion Formula

The optimal capital fraction is calculated as f* = (b · p - q) / b, where b is net payout odds, p is your probability of winning, and q = 1 - p. Fractional Kelly (0.25x - 0.5x) is widely utilized to guard against estimation error and black swans.