In this guide
Key takeaway: Liquidity stands as the cornerstone for anyone trading prediction markets. When liquidity runs deep, you benefit from compressed spreads, rapid order execution, and market prices that genuinely reflect probabilities. Polymarket dominates this space with $1.5B+ in total traded volume; rival platforms typically operate at substantially lower levels.
Prediction market liquidity shapes your entire trading experience — influencing both the cost of entry and your ability to unwind positions swiftly. Yet newcomers often prioritise available markets over their liquidity characteristics. This article explores why liquidity should be your primary consideration.
What is liquidity?
Within financial markets, liquidity refers to the ease with which you can acquire or dispose of an asset whilst keeping price movement minimal. For prediction markets, three distinct elements define liquidity:
- Depth: The quantity of shares accessible at various price points across the order book
- Spread: The distance separating the highest purchase offer (bid) from the lowest sale offer (ask)
- Volume: The total number of shares transacted during a specific timeframe
A market displaying 10,000 shares bidding at 48 cents alongside 10,000 shares offered at 50 cents exhibits strong liquidity. By contrast, a market with merely 50 shares on each side separated by a 10-cent gap demonstrates poor liquidity.
Why liquidity matters for traders
Insufficient liquidity drains your capital through multiple channels:
- Wider spreads: Entry and exit costs increase substantially
- Slippage: Sizeable trades push prices unfavourably against your position
- Trapped positions: Without willing buyers, you may remain locked in until market settlement
- Price inaccuracy: Thin markets generate prices divorced from actual probability assessments
How to measure prediction market liquidity
Prior to committing capital, evaluate these metrics:
- Order book depth: On PolyGram, the depth chart reveals the scale of buy and sell interest
- 24h volume: Elevated trading activity correlates with smoother order fills
- Number of unique traders: Markets attracting 100+ distinct participants typically possess adequate liquidity for standard retail positions
- Spread percentage: Target markets where spreads remain below 3 cents (3%) to minimise trading 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 competing bids and asks, capturing the spread differential whilst supplying depth to the broader trading community. Polymarket attracts these operators through fee reductions and MATIC incentives. PolyGram's proprietary liquidity engine replicates Polymarket's order book architecture, guaranteeing PolyGram participants access to equivalent depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Restrict yourself to limit orders — avoid market orders when order books are sparse
- Distribute sizable positions across multiple price tiers
- Exercise restraint: establish your target price and allow the market to fill your order rather than accepting unfavourable prices
- Factor in timeline — thinly-traded markets frequently gain depth as settlement approaches
Trade on the most liquid prediction market platform. Start trading on PolyGram →