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The arithmetic that decides whether a strategy makes money, written out properly. No picks, no signals — just the parts most people get wrong, with the numbers computed rather than quoted.
Prediction market fees work differently from a sportsbook's vig, and Kalshi's
are the clearest example. Kalshi charges a trading fee of 0.07 × P × (1 − P) per
contract, where P is the price in dollars. That is the formula most
people stop at, and it is the less useful of the two ways to look at it.
What matters is the fee as a share of the money you put up. You pay
P per contract, so that share is 0.07 × (1 − P)
— and it is largest on the cheapest contracts, which is the opposite of
most people's intuition.
| Entry price | Fee per contract | Fee as % of capital | Max gross return | Max return after fees |
|---|---|---|---|---|
| 10¢ | $0.0063 | 6.30% | 900.0% | 893.7% |
| 30¢ | $0.0147 | 4.90% | 233.3% | 228.4% |
| 50¢ | $0.0175 | 3.50% | 100.0% | 96.5% |
| 70¢ | $0.0147 | 2.10% | 42.9% | 40.8% |
| 90¢ | $0.0063 | 0.70% | 11.1% | 10.4% |
A contract settles at $1.00 or $0.00. So the most you can make is
(1 − P) / P, decided entirely at the moment you buy. Pay
70¢ and your ceiling is about 41% after fees no matter how certain you
were. Pay 30¢ and it is about 228%.
This is why "I was right" and "I made money" are different claims. Being right at 90¢ nine times pays less than being right at 30¢ three times.
Our own priced tennis book is 88–89 of 177 graded (269 ungraded) — a 49.7% win rate — and it is +$0.142 net per contract. Both things are true at once, because what you are paid depends on the price you paid, not on how often you were right.
A win rate quoted without the prices behind it is a vanity number. It is also the number every tipster leads with, for exactly that reason. Ask what price the wins were bought at, and what the losses cost.
Closing line value is the difference between the price you got and the price the market settled on right before the event. If you consistently buy at better prices than the close, you are ahead of the market; if you do not, a good week was luck.
It matters because it shows up in far fewer trades than profit does. Results are mostly noise over a few dozen bets; CLV is measurable almost immediately, which is why it is the honest way to judge a young strategy — including ours.
Kalshi is a CFTC-regulated exchange for event contracts. You buy YES or NO at a price between 1¢ and 99¢; it settles at $1.00 or $0.00 on the real outcome. Because it is an exchange and not a sportsbook, there is no vig baked into the line — you pay the spread and the fee above instead, and you can sell before settlement rather than being stuck to the end.
The practical consequences: the spread matters as much as the pick, a resting take-profit can capture a move without waiting for the result, and thin books mean a large order moves the price against you.
Both are prediction markets where contracts settle at $1.00 or $0.00, and the arithmetic on this page applies to either. The practical differences: Kalshi is a CFTC-regulated US exchange settling in dollars, with the explicit fee schedule above. Polymarket settles in crypto and its cost is carried mostly in the spread rather than a published per-contract fee.
Which is better depends on what you need — regulated dollar settlement, or the markets and access the other offers. The maths for judging a strategy does not change between them.
Across 281 recorded exits on this desk, resting take-profit targets earned while stops and unprotected run-to-expiry accounted for the entire loss. Most effort goes into choosing what to buy. On our own numbers, more of the result was decided by how the position was closed.
Educational and informational only. EDGEWISE is software. It is not a broker, exchange, investment adviser or commodity trading advisor, and nothing here is investment, trading, legal or tax advice. Figures describing this desk's own record are re-derived from its ledgers and carry their denominators. Past performance is not indicative of future results. Event contracts carry risk, including total loss of the amount committed.
For educational and informational purposes only. EDGEWISE is software. It is not a broker, exchange, investment adviser, or commodity trading advisor, and nothing it produces is investment, trading, legal, or tax advice. No output is personalized to any individual's circumstances, objectives, or risk tolerance.
Past performance is not indicative of future results. Any record, probability, or projection shown is an estimate produced by software over a limited sample and is frequently wrong. Event contracts carry risk, including total loss of the amount committed. Do not commit money you cannot afford to lose.
You are solely responsible for every order you place and for operating within your exchange's rules, including any personal position or trading limits applied to your account. Software provided by EDGEWISE is standardized and identical for all users; it is not customized to any individual.