Prediction Market Bankroll Management: How to Size Positions & Avoid Going Broke

The fastest way to zero in prediction markets is treating them like a casino. Sharp traders survive decades by obsessing over position sizing more than individual picks.

Good edges appear regularly, bad luck streaks do too. Proper bankroll management turns positive expectancy into long-term wealth.

Core Rules That Save Accounts

Never risk more than one to two percent of total bankroll on a single outcome. High-conviction seventy percent edges still lose thirty percent of the time. One bad run wipes reckless stacks.

Separate platforms if possible. Keep Polymarket, Kalshi, and Worm.wtf allocations distinct to avoid correlated blowups.

Kelly Criterion Adapted for Yes/No Markets

Full Kelly: Bet fraction = (edge / odds). Simplified for prediction markets: Bet bankroll percent = (your probability - market probability) / market probability for Yes (reverse for No).

Half-Kelly cuts volatility while preserving most growth. Conservative traders use quarter-Kelly.

Example: Market prices event at sixty percent (Yes costs $0.60). You estimate seventy five percent true probability. Half-Kelly says risk roughly twelve percent of bankroll.

Leverage Traps on Worm.wtf

Leverage magnifies edges and drawdowns. Treat leveraged position sizing as if the full notional amount is at risk. A 3x position should count triple toward your one to two percent rule.

Most blowups happen chasing leverage on “sure things.”

Practical Position Sizing Framework

Tier your confidence:

• Low (55-60 percent): 0.5 percent risk
• Medium (60-70 percent): 1 percent risk
• High (70-80 percent): 1.5 percent risk
• Moonshot (80+ percent): 2 percent max

Cap concurrent risk at ten to fifteen percent total exposure.

Real Case Studies

Trader A risked twenty percent per election market in 2024, nailed ten straight, then lost three crushing ones. Account gone.

Trader B stuck to one percent rule, suffered same three losses, barely dented. Compounded gains over years.

Tools and Habits

Track every trade: entry odds, size, reasoning, outcome. Review monthly. Cut size after three consecutive losses. Increase only after sustained profitability.

Bankroll management is boring until it saves your stack. Then it feels genius.

Master the platforms first in our guides like What Is Worm.wtf?. Full Prediction Markets category for edges worth protecting.