Most losses in prediction markets come from a few repeatable risk mistakes rather than from bad luck alone. Naming them makes them easier to avoid.
Chasing Losses
Increasing position size to win back a loss quickly is one of the fastest ways to empty a bankroll. Stick to your sizing rule, especially after losing.
Treating High Prices as Safe
A 95¢ share can still resolve to zero. Buying many near-certain shares can create a large loss from one surprise.
Ignoring Resolution Rules
Misreading how a market resolves can turn a correct opinion into a losing position. Always read the rules and the resolution source.
Overtrading
Trading because you are bored or excited adds costs and mistakes. Fewer, better-researched positions are usually easier to manage.
Worked Example
After a $15 loss, a trader wants to buy $60 of YES at 92¢ to recover fast. Their rule allows $10. They follow the rule instead: if the market fails, they lose $10, not $60, and their bankroll stays healthy.
Key Takeaways
- Never raise size to chase losses.
- High prices are not guarantees.
- Read resolution rules before trading.
- Trade less, but with a clear reason.