DIVERSIFIED EVENT PORTFOLIO
Overview
Build a prediction market portfolio of 15-25 positions across uncorrelated event categories. Rather than concentrating on a single event type, spread capital across economic, political, financial, and other categories. This smooths returns and reduces the impact of any single wrong call.
Setup
- 1.Define your PM capital allocation (separate from your stock/futures capital).
- 2.Divide into 4-5 event categories: economic data, Fed policy, financial markets, political, other.
- 3.Allocate no more than 30% to any single category and no more than 10% to any single contract.
- 4.Seek contracts across different resolution timelines (some resolving this month, some next quarter).
- 5.Only deploy capital where you have genuine edge — leave some capital undeployed rather than forcing trades.
- 6.Review and rebalance quarterly; track win rate and calibration by category.
Max profit
Aggregate return across all positions. Positive expected value across many events compounds significantly.
Max loss
Theoretical maximum loss is 100% of deployed PM capital — but diversification makes the actual portfolio loss much lower in practice.
Breakeven
Weighted average cost of all positions.
When to use
Always — this is the baseline approach for any serious prediction market participant. Individual bets are speculative; a calibrated portfolio is an edge-based investment system.
When to avoid
Forcing diversification into event types where you have no analytical advantage. 15 random trades is not a portfolio — it's 15 gambles. Diversify only across areas where you can do genuine analysis.