Polymarket: Do you guys factor in resolution risk for position sizing?
Been dabbling in Polymarket for a bit, mostly small stuff on the political outcomes or crypto prices. I'm starting to think about upping my position sizing on some higher conviction plays, but there's this nagging thought about resolution risk. Not talking about the market settling the wrong way, that's just part of the game. I mean the actual process of resolution, especially for events that rely on external verification or can be disputed. Had a small one on a niche crypto event last month where the resolution got delayed for like a week because the source for the 'definitive answer' wasn't clear cut, and it just tied up capital longer than I expected.
For those of you with more experience, how do you factor this into your position sizing? Do you just assume a certain delay for all but the most clear-cut markets, or do you adjust your potential allocation downwards based on how ambiguous the resolution criteria seem at the outset? Or is it just 'deal with it' territory and part of the overhead for Polymarket? Just trying to refine my approach.
That's a really good point. For something like election outcomes, the resolution is fairly clear, but for more complex events, delays or disputes in how a market is settled could definitely tie up capital longer than expected. Do you typically try to factor in a buffer for that, or just avoid markets with ambiguous resolution criteria altogether?