Before committing capital to any strategy, the obvious question is: what can I actually expect to make? For prediction market arbitrage, the honest answer is: it depends on capital size, market activity, and execution quality — but the numbers are genuinely attractive for a market-neutral strategy.
Typical spread sizes
Gross arbitrage edges on Polymarket/Kalshi pairs typically range from 1.5% to 6% per trade. The distribution is skewed:
- Most opportunities: 1.5%–3% gross edge
- High-activity events (elections, Fed decisions): 3%–8% gross edge
- After platform fees (~0.5–1% per side): net edges typically 0.5%–5%
Only opportunities with net edge above your threshold (typically 1%+) are worth trading.
Frequency of opportunities
Across thousands of actively monitored markets, an engine like Arbitrage Agent's can surface multiple actionable opportunities per day (net edge >1% after fees), depending on market conditions. Not all of these can be filled at the quoted price due to thin order books — realistic fill rates depend on market conditions.
Capital requirements
There's no minimum, but practical considerations suggest:
- Under $1,000: Transaction costs and small contract sizes limit scalability. Returns in absolute terms will be modest.
- $1,000–$10,000: The sweet spot for getting started. Enough to fill most opportunities at quoted prices without moving the market.
- $5,000: Larger capital runs into liquidity limits on thin markets. Position sizing must account for order book depth.
Realistic monthly returns
Assuming a $5,000 bankroll, 20 trades/month at average net edge of 2%, and average position size of $200:
- Monthly P&L: 20 × $200 × 2% = $80
- Monthly return on capital: 1.6%
- Annualised: ~20% on deployed capital
These numbers scale roughly linearly with capital up to the liquidity ceiling of each market. More trades, larger positions, and higher-edge opportunities all improve results.
Factors that affect performance
Market activity: More news = more price divergences = more opportunities. Election cycles, major economic events, and breaking news all create spikes in arbitrage opportunities.
Execution speed: Faster execution captures more opportunities before windows close. The difference between 200ms and 2,000ms execution is significant at the margin.
Fee optimisation: Maker vs taker orders, tier discounts, and choosing which side to place on which platform can reduce fee drag.
Is it worth it?
For a market-neutral strategy — one that doesn't require predicting anything — 15–25% annualised returns on deployed capital with minimal directional risk is genuinely attractive. The main constraint is market liquidity, not strategy quality. Join the Arbitrage Agent waitlist to get automated access and start capturing these opportunities.