In this guide
Key takeaway: Liquidity stands as the paramount consideration 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 the sector with $1.5B+ in cumulative volume; the vast majority of competing platforms lag considerably behind in terms of available depth.
Prediction market liquidity shapes your entire trading journey — influencing both the rate at which you enter and exit trades as well as the speed at which you can unwind exposure. However, most newcomers prioritise market selection over liquidity considerations. This article explores why liquidity deserves your primary attention.
What is liquidity?
Within financial markets, liquidity refers to the ease with which you can acquire or dispose of an asset without materially altering its quoted price. For prediction markets, 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 (buyers' best offer) from the lowest ask price (sellers' best offer)
- Volume: The total number of shares traded throughout a specified timeframe
A market displaying 10,000 shares bid at 48 cents alongside 10,000 shares offered at 50 cents demonstrates strong liquidity. By contrast, 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 extracts costs through multiple channels:
- Wider spreads: You incur greater expenses when establishing and closing positions
- Slippage: Substantial orders push the market against your intended direction
- Trapped positions: Absence of willing counterparties prevents you from liquidating holdings before market settlement
- Price inaccuracy: Thin markets generate prices disconnected from genuine probability assessments
How to measure prediction market liquidity
Prior to committing capital, evaluate these metrics:
- Order book depth: PolyGram's depth chart displays the distribution of buy and sell interest across price levels
- 24h volume: Elevated trading activity correlates with superior order execution prospects
- Number of unique traders: Markets attracting 100+ distinct participants typically maintain sufficient liquidity for standard retail positions
- Spread percentage: Target markets where spreads remain 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 coordinated buy and sell orders simultaneously, capturing the spread differential whilst supplying depth to the broader trader 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 depth as those trading directly on Polymarket.
Tips for trading illiquid markets
- Employ limit orders exclusively — avoid market orders in thin conditions
- Distribute sizable orders across multiple price tiers
- Exercise patience: establish your desired price and await execution rather than accepting unfavourable terms
- Account for temporal dynamics — markets approaching settlement frequently experience improved liquidity
Execute trades on the most liquid prediction market platform. Start trading on PolyGram →