EV Calculator

What is Expected Value in Prediction Markets?

Expected Value is the single most important concept in prediction market trading. It answers the question: is the market price wrong enough that I should take a position? If the market says a recession has a 28% chance and your model says 40%, that gap is your edge. But the size of the gap relative to the market price is what actually matters — a 12-point gap at 28¢ is a much larger edge than a 12-point gap at 70¢.

The formula normalizes the gap to the market price, giving you a clean edge percentage. A +25% edgemeans the market is underpricing the event by 25% relative to what you believe is fair value. That's the number that tells you whether to trade — and how confident to be when you do.

When to BUY, SELL, or SKIP

The ±5% threshold filters out noise. Markets are rarely perfectly efficient, but small gaps often close before you can act on them. A BUY signal at +5% means you have meaningful edge. A BUY signal at +20% means the market is significantly mispriced — size accordingly with the Kelly Criterion calculator. To surface those large gaps without checking every contract by hand, run the Mispricing Scanner, which ranks the widest market-versus-model divergences across Kalshi and Polymarket in one pass, then bring the strongest candidate back here to confirm the edge before you take a position.

A SELL signal means the market is overpricing the YES outcome relative to your estimate. If you already hold YES contracts, this is a signal to exit. If you don't hold a position, you can consider buying NO — which on Kalshi is simply the inverse of the YES price.

EV vs. the market price

This is different from asking “is the market price low?” A market at 10¢ might be a terrible trade if you think it should be at 8¢. A market at 80¢ might be the trade of the week if you think it should be at 95¢. EV is always relative to your probability estimate — which is why the estimate matters more than anything else. Sharpen your model, and the calculator tells you exactly when to act.

Common questions

How do I calculate expected value on a Polymarket trade? Polymarket prices run 0 to $1.00, so multiply by 100 before entering them — a $0.28 contract is 28¢ in the calculator. From there the math is identical to Kalshi: edge equals your probability estimate minus the market price, divided by the market price. A 28¢ contract you value at 40¢ is a +43% edge, squarely in BUY territory. The same ±5% threshold applies: BUY above +5%, SELL below −5%, SKIP between.

Is a 10% edge enough to trade a prediction market? A +10% edge clears the calculator's ±5% noise threshold, so it registers as a real BUY signal rather than SKIP — but the quality of that number depends entirely on your probability estimate. Treat +5% to +15% as thin edges that demand a calibrated input and a small position; +20% and up is where the market is meaningfully mispriced. Size every signal through the Kelly Criterion calculator, not by feel.

Does the EV Calculator work for buying NO contracts? Yes — a NO contract costs 100¢ minus the YES price, so a 45¢ YES contract means NO trades at 55¢. To evaluate the NO side, enter 55 as the market price and your probability that the event does not happen. A SELL signal on YES is mathematically the same call as a BUY on NO, since the two are mirror images of a single position.