Polymarket EV Calculator
Calculate the expected value of a Polymarket position to determine whether a bet has a positive or negative edge based on your estimated true probability
Current price of a Yes share (0.01 - 0.99)
Your estimated probability the event happens (0.01 - 0.99)
Amount you plan to invest in dollars
Ready to Calculate EV
Enter your market position details and click calculate to see the expected value
What Is Expected Value and Why It Matters on Polymarket
Expected Value (EV) is the single most important concept for anyone trading on prediction markets like Polymarket. In simple terms, EV tells you how much money you can expect to make (or lose) on average from a given position over the long run. It combines the probability of each outcome with the corresponding payoff to produce a single number that captures the overall quality of a bet. A positive EV means the bet is profitable on average; a negative EV means you're expected to lose money over time.
On Polymarket, you buy Yes or No shares at a market-determined price between $0.01 and $0.99. If the event resolves in your favor, each share pays out $1.00. If it doesn't, your shares are worth $0. The market price effectively represents the crowd's consensus probability of the event occurring. When you buy a Yes share at $0.65, the market is saying there's roughly a 65% chance the event happens. Your opportunity lies in identifying situations where you believe the true probability differs from the market price. That gap between your estimate and the market price is your edge, and EV quantifies exactly how valuable that edge is in dollar terms.
The formula is straightforward: multiply your estimated probability of winning by the profit you'd earn if you win, then subtract the probability of losing multiplied by the amount you'd lose. If you buy Yes shares at $0.65 with $100, you get about 153.85 shares. If the event happens, each share pays $0.35 in profit (the difference between $1.00 and $0.65), giving you $53.85 in profit. If it doesn't happen, you lose your $100. With a 75% true probability, your EV is (0.75 x $53.85) - (0.25 x $100) = $40.38 - $25.00 = $15.38. That positive EV of $15.38 means this is a profitable bet if your probability estimate is accurate.
How to Estimate True Probabilities
The entire EV calculation hinges on one critical input: your estimated true probability. If your probability estimate is wrong, your EV calculation will be wrong too, and you'll think you have an edge when you don't. This is the hardest part of prediction market trading, and it's where the real skill lies. There's no magic formula for estimating probabilities, but there are systematic approaches that can improve your accuracy.
Start with base rates. If you're evaluating a political market, look at historical data for similar situations. How often has the incumbent party won in comparable economic conditions? What do polling aggregates suggest? For sports markets, examine team statistics, recent form, and head-to-head records. For crypto or financial markets, study historical volatility and price action during similar macro environments. Base rates give you a starting point that's grounded in data rather than gut feeling.
Then adjust from the base rate using any unique information or analysis you have. Maybe the polls haven't captured a recent major event. Maybe a key player's injury hasn't been fully priced in. Maybe you have domain expertise that gives you insight the crowd lacks. The key is to be honest about how much your private information actually shifts the probability. Most people are overconfident in their unique insights. A good discipline is to ask yourself: "If I told a smart, informed person my reasoning, would they update their estimate by this much?" If the answer is no, you're probably overestimating your edge. Being well-calibrated matters far more than being confident.
When to Bet: Position Sizing and Risk Management
Finding a positive EV opportunity is only half the battle. The other half is deciding how much to risk. Even a strongly +EV bet can ruin you if you bet too much and lose. This is where the Kelly Criterion comes in. Kelly tells you the optimal fraction of your bankroll to wager based on your edge and the odds. The formula produces the bet size that maximizes long-term growth while avoiding ruin. In practice, most experienced traders bet a fraction of Kelly (often half or quarter Kelly) because probability estimates are never perfectly accurate, and being more conservative protects you from estimation errors.
Consider the risk-reward asymmetry in prediction markets. When you buy a Yes share at $0.90, you're risking $0.90 to win $0.10. Even if you're right 95% of the time (a 5% edge), your wins are small and your losses are large. You need a long string of correct predictions to overcome a single loss. Conversely, buying at $0.10 risks $0.10 to win $0.90. Here, even a small edge translates to large percentage returns. This doesn't mean cheap shares are always better, but it does mean you should think carefully about the payoff structure, not just the EV, when sizing positions.
Finally, diversify across markets. Even with solid +EV bets, any single market can resolve against you. By spreading your capital across multiple uncorrelated +EV positions, you smooth out the variance and make it much more likely that your actual results converge toward your expected results. Think of it like a casino: any single hand of blackjack is uncertain, but over thousands of hands, the house edge reliably produces profit. You want to be the house, not the gambler putting everything on a single hand.