How do you guys approach position sizing on Polymarket for events with low liquidity?
Hey everyone, still pretty new to the Polymarket space and trying to get my head around it beyond just picking what I think will happen. I've been watching some of these smaller markets, especially the ones that pop up and then don't get a ton of volume. It feels like there's an edge to be had if you can identify mispriced odds early, but then I hit a wall with sizing.
Like, if I see something I'm really confident in, but the total liquidity on one side is only $500, how do you all decide how much to put in? Do you scale down your typical bet size dramatically, or do you just avoid those markets altogether? I'm worried about putting in, say, $100 and then not being able to exit cleanly if things shift, or worse, if I'm right but my position is a huge chunk of the market and impacts the odds too much. Is there a general rule of thumb for what percentage of total market liquidity you're comfortable taking on? Or is it more about the potential profit vs. the risk of illiquidity?
Low liquidity on Polymarket usually means wider spreads and more slippage when you try to exit. Any "edge" might get eaten up by transaction costs, making it a less attractive proposition for larger sizing.