How to make money on Polymarket and Kalshi: 8 strategies traders actually use
Prediction markets are zero-sum before fees, so profit comes from an edge. Eight strategies that work, from specialist knowledge and cross-platform pricing to negative-risk bundles, market making and high-probability trades, with the risks of each.
In this article
- 1. Trade what you know better than the market
- 2. Compare platforms before every trade
- 3. Arbitrage, and Polymarket's negative-risk markets
- 4. Market making
- 5. High-probability trades near resolution
- 6. Trade scheduled news
- 7. Fade overreactions and overpriced longshots
- 8. Get paid to hold
- Risk management: what keeps profitable traders in the game
- Making money on prediction markets: frequently asked questions
- Keep reading
You can make money on Polymarket and Kalshi, but only by being more right than the price, or by being paid for providing something the market needs. Before fees, every dollar one trader wins another trader loses, and public leaderboards show most of the profit going to a small group of skilled, disciplined traders. These are the strategies they use.
Rates and programmes mentioned below are as of October 2026 and change often. None of this is financial advice.
1. Trade what you know better than the market
The most reliable edge is specialist knowledge: a sport, a state's politics, a court's habits, an industry's data releases. Markets on niche questions attract less attention, so prices can stay wrong for longer. Write your probability down before you look at the price, trade only when the gap beats the fees, and track your record (expected value, Brier score).
2. Compare platforms before every trade
Kalshi and Polymarket often price the same event a few points apart. Even if you are not arbitraging, buying on the cheaper platform improves every trade you were going to make anyway. Our Compare page and election hub show both prices side by side.
3. Arbitrage, and Polymarket's negative-risk markets
True arbitrage, buying both sides across platforms for a guaranteed profit, exists but is small and short-lived after fees, and the two platforms' rules can differ (prediction market arbitrage).
A related opportunity lives inside multi-outcome events on Polymarket. Many of them are negative-risk markets: because exactly one outcome can win, a "No" share on one candidate is equivalent to a "Yes" share on every other candidate, and Polymarket lets you convert one into the other. In a three-way race between A, B and C:
- "No on A" pays exactly when B or C wins, the same as holding "Yes on B" plus "Yes on C".
- If you can buy "No on A" for less than you can sell "Yes on B" and "Yes on C" for, buying, converting and selling locks in the difference.
- More simply: if the asks for every outcome add up to less than $1, buying one of each guarantees $1.
These gaps are usually a cent or two, appear in fast-moving events, and are competed for by bots, so fees and speed decide whether they are worth it.
4. Market making
Market makers post both a bid and an ask and earn the spread when both fill. On Polymarket, makers pay no fee, receive rebates, and can earn liquidity rewards for quoting near the midpoint; Kalshi pays incentives to market makers on many markets too. The risk is adverse selection: when news breaks, the traders who hit your quotes know more than you, and you are left holding the losing side. Market making suits automated, careful traders: limit order vs market order, Kalshi and Polymarket API.
5. High-probability trades near resolution
Some traders buy outcomes at 95–99¢ shortly before they resolve, collecting a small return on near-certain events. It works most of the time, which is exactly the danger: one surprise wipes out dozens of wins. Two checks before you do it:
- The annualised return: a 97¢ contract resolving in a week returns about 3% in seven days; one resolving in a year returns about 3% a year, less than cash.
- The rules: many "certain" outcomes lose on a technicality, a delay or a dispute (how markets resolve).
6. Trade scheduled news
Inflation reports, jobs numbers, Fed decisions, earnings and court rulings arrive at known times. Prices before the release reflect the consensus; prices after reflect the result. Edges come from better forecasts of the number (economists' track records, nowcasts) or from reacting faster to the release than others. Speed alone is a crowded game dominated by bots.
7. Fade overreactions and overpriced longshots
Prices often overshoot after dramatic news and drift back. And because of the favourite-longshot bias, cheap outcomes tend to be overpriced: things priced at 3¢ happen less than 3% of the time. Selling longshots (buying "No" at 97¢) captures that bias, but it is the same picking-up-pennies risk as strategy 5, so size it carefully (are prediction markets accurate).
8. Get paid to hold
- Kalshi pays a variable interest rate (3.50% APY at the time of writing) on cash and positions for eligible US accounts above a minimum balance.
- Polymarket pays variable holding rewards (3.25% a year at the time of writing) on positions in selected long-dated markets (Polymarket rewards explained).
These do not create an edge on their own, but they make long-dated positions much cheaper to hold and they change the expected value of high-probability trades.
Risk management: what keeps profitable traders in the game
- Size positions with a fraction of Kelly, never your whole bankroll on one idea (the Kelly criterion, Kelly calculator).
- Check the expected value of every trade after fees before you place it (EV calculator).
- Use limit orders to save fees and slippage.
- Hedge when a position becomes too big a share of your money (how to hedge).
- Keep records for scoring and for taxes (Kalshi and Polymarket taxes).
- Watch the best traders to learn, not to copy blindly (Polymarket leaderboard, whale tracker).
Making money on prediction markets: frequently asked questions
Can you really make money on Kalshi?
Yes, if you have an edge after fees. Without one, fees mean you lose slowly on average.
How do Polymarket traders make money?
Mostly through specialist knowledge, market making and rewards, cross-platform pricing and fast reactions to news.
What is the safest strategy?
None is risk-free. Buying on the cheaper platform and using limit orders are the lowest-risk improvements; high-probability trades look safe but carry rare, large losses.
Do I pay taxes on prediction market profits?
In the US, yes. Kalshi issues tax forms; on global Polymarket you track your own gains.
