Expected Value Calculator
Is a trade worth making? Enter the market price and your probability estimate to see the expected value — the math behind every smart trade.
Worked Example (Illustrative Only)
These examples demonstrate how the formulas work using hypothetical assumptions.
The contract is priced at 40¢ on Polymarket. You've done your research and believe there's a 55% chance it happens. You want to risk $200.
The market prices Bitcoin at 40% to hit $100K, but you think it's 55%. That 15-point edge means each 40¢ contract has an expected value of +15¢. Over many similar trades, you'd expect to earn roughly $75 on this $200 position. But remember: you'll still lose $200 about 45% of the time on this specific trade.
Expected Value Explained
Understanding expected value is the single most important concept for making profitable trades.
What is expected value in prediction markets?
Expected value (EV) is the average profit or loss you'd expect per dollar risked if you made the same trade many times. A positive EV means the trade is profitable on average; a negative EV means you'd lose money over time. For example, if a contract costs 60¢ and you believe the true probability is 75%, your EV is positive — you're paying 60¢ for something you think is worth 75¢.
How do you calculate expected value?
The basic EV formula is: EV = (your probability × profit if you win) − ((1 − your probability) × loss if you lose). For prediction markets: if you buy YES at 60¢ and believe the probability is 75%, your EV per contract = (0.75 × $0.40) − (0.25 × $0.60) = $0.30 − $0.15 = $0.15. That means you'd expect to make 15¢ per contract on average. The calculator above does this math for you, including platform fees.
What does 'edge' mean in prediction markets?
Your edge is the difference between your probability estimate and the market's implied probability. If a contract trades at 60¢ (implying 60%) and you believe the true probability is 75%, your edge is +15 percentage points. A larger edge means higher expected value per trade. If your edge is zero or negative, the trade has no expected profit — you're better off not trading.
Why does expected value matter more than win rate?
You can have a 40% win rate and still be profitable if your winning trades pay more than your losing trades cost. EV captures both the probability of winning and the size of the payoff. A 10¢ contract with a 20% true probability has positive EV — you'll lose 80% of the time, but when you win, you make 90¢ on a 10¢ investment. Over many trades, the wins more than cover the losses.
How accurate does my probability estimate need to be?
Your probability estimate doesn't need to be exact — it just needs to be better than the market's price on average. If the market says 60% and the true probability is anywhere above 60%, you have an edge. The challenge is that most people overestimate their ability to predict outcomes. If you're consistently wrong about probabilities, positive-EV trades on paper become negative-EV trades in practice. Track your predictions over time to calibrate your accuracy.
Does expected value guarantee a profit?
No. Expected value describes what happens on average over many trades, not what happens on any single trade. A positive-EV trade can still lose — and will, sometimes frequently. If you buy YES at 30¢ with a true probability of 40%, you have positive EV but you'll still lose 60% of the time. The law of large numbers means your results converge toward the expected value as your number of trades increases, but any individual trade is uncertain.
How do fees affect expected value?
Platform fees reduce your effective profit on winning trades, which directly lowers your EV. A trade that looks profitable before fees might be break-even or negative after fees. This is especially important for small edges — if your edge is only 2–3 percentage points and Kalshi's taker fee takes 1.5–2%, most of your edge is consumed by fees. The calculator above includes platform-specific fees so you can see the true EV after costs.
Should I take every positive-EV trade?
Not necessarily. Even if a trade has positive EV, you need to consider position sizing (how much of your bankroll to risk), correlation with your other positions (are you doubling up on the same outcome?), and liquidity (can you actually buy or sell at the displayed price?). Use the Kelly criterion calculator to determine how much to allocate to each positive-EV opportunity. Many small positive-EV trades are better than one large one.