In this guide
Key takeaway: Liquidity stands as the paramount consideration for anyone trading prediction markets. When liquidity runs deep, you benefit from compressed bid-ask spreads, rapid order execution, and market prices that genuinely reflect underlying probabilities. Polymarket dominates the sector with $1.5B+ in cumulative volume; rival platforms typically operate at substantially lower trading depths.
Prediction market liquidity shapes your entire trading experience — influencing both the cost of entry and your ability to unwind positions swiftly. Yet many newcomers prioritise which markets exist rather than assessing how much liquidity those markets contain. This article clarifies why liquidity outweighs all other considerations.
What is liquidity?
Within financial markets, liquidity refers to the ease with which you can purchase or dispose of an asset whilst avoiding substantial price movement. For prediction markets in particular, three distinct dimensions define liquidity:
- Depth: The quantity of shares available at successive price tiers within the order book
- Spread: The distance separating the highest bid price (buy side) from the lowest ask price (sell side)
- Volume: The total number of shares traded during a specified timeframe
A market displaying 10,000 shares on the bid side at 48 cents alongside 10,000 on the ask side at 50 cents demonstrates strong liquidity. Conversely, a market with merely 50 shares on each side separated by a 10-cent gap exhibits poor liquidity.
Why liquidity matters for traders
Inadequate liquidity drains your capital through multiple mechanisms:
- Wider spreads: You incur greater costs when establishing and closing trades
- Slippage: Substantial orders push prices unfavourably against your position
- Trapped positions: Absence of willing buyers prevents you from exiting before the market settles
- Price inaccuracy: Thin markets produce prices that diverge from genuine probabilities
How to measure prediction market liquidity
Prior to executing any trade, evaluate these metrics:
- Order book depth: On PolyGram, consult the depth chart to examine bid and ask concentrations
- 24h volume: Elevated volume indicates robust trader participation — facilitating easier order fills
- Number of unique traders: Markets attracting 100+ distinct participants typically possess sufficient liquidity for standard retail positions
- Spread percentage: Target markets displaying spreads below 3 cents (3%) to minimise transaction expenses
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 deploy paired buy and sell orders simultaneously, capturing profit from the bid-ask differential whilst supplying depth to the broader trading community. Polymarket attracts these professionals through competitive fee structures and MATIC incentive schemes. PolyGram's proprietary liquidity engine replicates Polymarket's order book architecture, guaranteeing PolyGram participants access identical depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Deploy limit orders exclusively — refrain from market orders when order book depth is minimal
- Distribute substantial orders across multiple price points
- Exercise restraint: establish your target price and await execution rather than accepting unfavourable crossing prices
- Evaluate the remaining time until settlement — thin markets frequently gain liquidity as resolution approaches
Trade on the most liquid prediction market platform. Start trading on PolyGram →