Position sizing is deciding how much to put on one prediction market trade, and it matters more than picking the side: the Kelly criterion says the share of your bankroll that maximises long-run growth is (q − p) ÷ (1 − p) when you buy Yes at price p and believe the real chance is q, but because your q is uncertain, most careful traders use a fraction of Kelly or a small fixed cap. On Nimb, the ticket takes one all-in dollar amount and shows exactly what you lose if wrong. Nothing here is financial advice.
What is the Kelly criterion for prediction markets?
For a share that costs p and pays $1, with your estimate of the chance q, the Kelly fraction is f = (q − p) ÷ (1 − p). If q is below p, Kelly says do not buy (consider the other side).
| Price p | Your chance q | Full Kelly | Quarter Kelly |
|---|---|---|---|
| 41% | 45% | 6.8% | 1.7% |
| 41% | 50% | 15.3% | 3.8% |
| 80% | 85% | 25.0% | 6.2% |
| 10% | 15% | 5.6% | 1.4% |
Use your break-even after fees as p, not the quoted price: a 41% Yes in a politics market through Nimb costs about 42.1% all-in. Fees.
Why not bet full Kelly?
- Your estimate is noisy. If your 50% is really 44%, full Kelly at 41% overbets badly. Overbetting loses money in the long run even with a real edge.
- Swings. Full Kelly regularly halves a bankroll before it grows. Half or quarter Kelly gives up a little growth for much smaller drawdowns.
- Correlated bets. Five markets on the same election are one bet, not five. Add them up. Themes and linked markets help spot this.
- Liquidity. A thin book may not let you exit. Size to what you can sell. Depth.
Simple sizing rules
- Set a bankroll you can lose entirely. Never top it up to chase losses.
- Cap any one market, for example at 2–5% of that bankroll, and any one theme at a little more.
- Use a fraction of Kelly only when you have a written, testable estimate.
- Count fees and spread before sizing.
Frequently asked questions
How much should I bet on Polymarket?
Only what you can afford to lose, and a small share of that on any one market. Nimb does not recommend amounts.
Does Kelly work for prediction markets?
The formula fits $1-payout shares exactly. Its weakness is your estimate of the chance, so fractions of Kelly are common.
What is expected value on Polymarket?
Your chance times the payout, minus the stake. A $100 Yes at 41% (about 237.7 shares after fees) has an expected value of +$19 if the real chance is 50%. Worked example.
Last reviewed 8 November 2026 · Data from Polymarket · Not financial advice · Nimb is not affiliated with Polymarket.