Lesson · [ 19 ]

FEES, SLIPPAGE & EXECUTION COSTS

Beginner5 min

Plain English

Edge in prediction markets dies fast to fees and slippage. A 5% edge can become a 0% edge after a wide spread, fee, and bad fill. Treat costs as part of every trade analysis.

Going deeper

Kalshi charges a flat ~1-2% on profits. Polymarket charges nothing on trades but takes spread on conversions. Slippage is the gap between quoted price and fill price on market orders — it can exceed 5 cents on illiquid contracts. Always use limit orders unless executing in the most liquid contracts. Account for the round-trip cost (entry + exit) in your edge calculation. A 4-cent edge with 2 cents of round-trip slippage is a 2-cent real edge — small but compoundable; a 4-cent edge with 5 cents of slippage is a money-loser.

Examples

Slippage kills the trade

You spot Yes at $0.40 with a fair value of $0.50. You market-buy 500 contracts and fill at average $0.44 due to thin order book. Your edge dropped from 25% to 14% just from slippage.

Limit order discipline

Place a limit at $0.41 instead of market. You may only fill 200 of 500 contracts but at a much better effective price. Patience pays in PM trading.