Liquidity refers to the ease of buying or selling an asset in the market. In prediction markets, if an event has few participants or most bets are concentrated on a few options, low liquidity may occur.
Low liquidity can cause two issues:
Unfavorable odds — The odds when you place a bet may differ from the ideal returns.
Difficulty exiting — If you want to exit early or adjust your bet, you may not be able to do so at your desired price.
Ways to address it:
Choose High-Participation Markets
Beginners are advised to prioritize prediction markets with many participants and active trading, ensuring better liquidity and smoother operations.
Diversify Bets
Avoid placing all funds in a low-liquidity market, which helps reduce risks caused by insufficient liquidity.
Observe Market Depth
Before betting, check the total bet amount and distribution among options to understand fund concentration and avoid pitfalls.
💡 Tip:
For beginners, participating in active markets not only reduces risk but also provides a clear view of market operations and fund flows.
For low-liquidity or niche markets, try small amounts or observe first, then increase your stake once market activity rises.