Calibration measures whether your probability estimates match reality over time, and it is the most honest test of prediction market skill.
What Calibration Means
If you are well calibrated, events you rate at 70% happen about 70% of the time. Being right once says little; patterns across many estimates say much more.
Recording Estimates
Log every estimate before resolution, including ones you did not trade. Otherwise memory will favour your wins.
Reading Your Results
Group estimates into ranges and compare with actual outcomes. Consistent gaps show whether you tend to be overconfident or underconfident.
Worked Example
Over 40 forecasts rated around 80%, only 24 came true, which is 60%. The trader is overconfident in that range. Next time they would have bought YES at 75¢ on an "80%" view, they pause, because their history suggests closer to 60%.
Key Takeaways
- Calibration compares estimates with outcomes.
- Log estimates before results are known.
- Look for patterns across many forecasts.
- Adjust future estimates using your record.