In this guide
Key takeaway: Liquidity stands as the paramount consideration for anyone trading prediction markets. Markets with substantial liquidity provide narrow bid-ask spreads, rapid order execution, and prices that accurately reflect underlying probabilities. Polymarket dominates the sector with over $1.5B in total traded volume; alternative venues typically operate at significantly lower trading intensity.
Prediction market liquidity shapes every aspect of your trading experience — from execution cost to position exit speed. However, most newcomers prioritise market selection over assessing available liquidity depth. This article clarifies why market depth supersedes all other considerations.
What is liquidity?
Within financial markets, liquidity refers to the ease with which an asset can be transacted without materially altering its price. For prediction markets in particular, three distinct dimensions characterise liquidity:
- Depth: The quantity of contracts available at successive price tiers within the order book
- Spread: The differential between the highest purchase offer (bid) and the lowest sale offer (ask)
- Volume: The total number of contracts traded within a specified timeframe
A market displaying 10,000 contracts offered at 48 cents and 10,000 requested at 50 cents demonstrates adequate liquidity. By contrast, a market with merely 50 contracts at each price level separated by a 10-cent gap exhibits poor liquidity conditions.
Why liquidity matters for traders
Insufficient liquidity imposes measurable costs on market participants:
- Expanded spreads: Entry and exit costs increase substantially
- Slippage: Sizable positions cause unfavourable price movement during execution
- Locked capital: Absence of willing buyers prevents timely position closure before market settlement
- Mispriced outcomes: Sparse trading activity results in probabilities that diverge from fundamental values
How to measure prediction market liquidity
Evaluate these metrics before committing capital:
- Order book depth: On PolyGram, the depth chart displays cumulative buy and sell interest across price levels
- 24h volume: Elevated trading activity correlates with improved fill probability — particularly for standard retail position sizes
- Number of unique traders: Markets attracting 100+ distinct participants typically offer sufficient depth for conventional retail orders
- Spread percentage: Target markets where the bid-ask gap remains below 3 cents (3%) to minimise transaction friction
Which platforms have the most liquidity?
| Platform | Cumulative volume | Avg. spread |
| Polymarket | $1.5B+ | 1-3 cents |
| Kalshi | $500M+ | 2-5 cents |
| Betfair Exchange | N/A (sports-focused) | 1-2% on sports |
| Augur/Azuro | $50M+ | 5-15 cents |
How market makers create liquidity
Institutional liquidity providers simultaneously post buy and sell quotations, capturing spread revenue whilst supplying depth to the broader market. Polymarket incentivises this activity through fee discounts and MATIC token allocations. PolyGram's proprietary liquidity engine replicates Polymarket's order book structure, granting PolyGram participants access to equivalent market depth available to Polymarket's direct users.
Tips for trading illiquid markets
- Deploy limit orders exclusively — avoid market orders when order book depth is sparse
- Distribute substantial orders across multiple price points to minimise market impact
- Exercise patience: post your desired price and await execution rather than accepting unfavourable crossing prices
- Account for temporal dynamics — markets approaching resolution frequently experience improved liquidity conditions
Trade on the most liquid prediction market platform. Start trading on PolyGram →