In this guide
Key takeaway: Liquidity stands as the paramount consideration for anyone trading prediction markets. Markets with substantial liquidity deliver compressed bid-ask gaps, rapid order execution, and pricing that accurately reflects true probabilities. Polymarket dominates the space with $1.5B+ in total trading activity; alternative venues typically provide considerably less depth.
Prediction market liquidity shapes your entire trading experience — influencing execution costs, position exit speed, and price discovery. Nevertheless, newcomers often prioritise market selection over assessing liquidity conditions. This article explores why liquidity fundamentally outweighs other considerations.
What is liquidity?
Within financial markets, liquidity refers to the ease with which you can purchase or dispose of an asset without materially altering its price. For prediction markets, liquidity encompasses three distinct dimensions:
- Depth: The quantity of shares accessible 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 shares traded throughout a specific timeframe
A market displaying 10,000 shares bid at 48 cents alongside 10,000 shares offered at 50 cents demonstrates strong liquidity. Conversely, a market with merely 50 shares on either side separated by a 10-cent gap exhibits poor liquidity.
Why liquidity matters for traders
Insufficient liquidity erodes your profitability through multiple channels:
- Wider spreads: You incur greater costs when establishing and closing positions
- Slippage: Substantial orders push pricing unfavourably for your direction
- Trapped positions: Absence of willing buyers prevents you from liquidating before market settlement
- Price inaccuracy: Thin markets generate prices disconnected from genuine probability assessments
How to measure prediction market liquidity
Prior to executing any trade, evaluate these metrics:
- Order book depth: Leverage PolyGram's depth visualisation tools to observe concentrated buying and selling interest
- 24h volume: Elevated trading activity correlates with improved order fulfilment likelihood
- Number of unique traders: Markets attracting 100+ distinct participants typically possess adequate liquidity for standard retail positions
- Spread percentage: Target markets where the spread remains beneath 3 cents (3%) for economical position management
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 competing bids and offers, earning revenue through spread capture whilst supplying essential liquidity to the broader trader base. Polymarket compensates these participants via fee reductions and MATIC token incentives. PolyGram's proprietary liquidity aggregation system replicates Polymarket's complete order book, guaranteeing PolyGram participants access identical depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Restrict yourself to limit orders — avoid market orders when dealing with sparse order books
- Distribute sizable orders across multiple price points
- Exercise patience: establish your target price and await execution rather than accepting unfavourable crossing prices
- Factor in timing dynamics — thin markets frequently deepen substantially as resolution approaches
Access the highest-liquidity prediction market venue. Start trading on PolyGram →