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 accurately reflect true probabilities. Polymarket dominates this space with over $1.5B in total traded volume; the vast majority of rival platforms operate at substantially lower levels of depth.
Prediction market liquidity shapes your entire trading experience — influencing both the cost at which you transact and your capacity to unwind positions swiftly. Yet novice traders often prioritise market selection over liquidity assessment. This article clarifies why liquidity ought to be your primary concern.
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 dimensions define liquidity:
- Depth: The quantity of shares available at successive price points throughout 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 specified timeframe
A market offering 10,000 shares at 48 cents on the bid side and 10,000 shares at 50 cents on the ask side demonstrates strong liquidity. By contrast, a market with merely 50 shares on each side separated by a 10-cent gap exhibits poor liquidity.
Why liquidity matters for traders
Insufficient liquidity creates multiple financial headwinds:
- Wider spreads: Entry and exit costs rise substantially
- Slippage: Sizeable orders push prices unfavourably for your position
- Trapped positions: Absence of willing buyers prevents you from closing before the market settles
- Price inaccuracy: Thin markets generate prices that diverge from genuine underlying probabilities
How to measure prediction market liquidity
Prior to executing any trade, evaluate these metrics:
- Order book depth: PolyGram's depth chart displays the landscape of accumulated buy and sell orders
- 24h volume: Elevated trading activity correlates with improved execution odds for your orders
- Number of unique traders: Markets attracting 100+ distinct participants typically possess sufficient liquidity for standard retail positions
- Spread percentage: Target markets where the spread 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 complementary buy and sell quotations, capturing the spread differential whilst furnishing depth to the broader trading community. Polymarket incentivises these participants through fee reductions and MATIC token distributions. PolyGram's proprietary liquidity engine replicates Polymarket's order book architecture, guaranteeing PolyGram participants access to equivalent market depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Employ limit orders exclusively — refrain from submitting market orders in sparse markets
- Distribute substantial orders across multiple price tiers
- Exercise patience: establish your desired price and await execution rather than accepting unfavourable crossing prices
- Assess the remaining time — sparse markets frequently gain depth as the event draws nearer to conclusion
Trade on the most liquid prediction market platform. Start trading on PolyGram →