Understanding Edge

Edge is the core concept of prediction.click. It tells you whether a market is mispriced and by how much.

What is Edge?

Edge = Fair Value - Market Price

• Fair Value = What our model says the probability should be (based on math)

• Market Price = What Polymarket currently says (based on supply/demand)

Example

	Value
Our Fair Value for "BTC UP 5m"	53%
Polymarket Market Price	49%
Edge	+4% (underpriced)

This means: our model thinks the market is worth 53 cents, but you can buy it for 49 cents. If the model is right, you're getting a 4-cent discount.

Reading the Edge

Edge	Color	Signal	What to do
> +3%	Green	BUY	Market is underpriced — consider buying
+1% to +3%	Light green	Hold	Small edge, might not be worth the risk
-1% to +1%	Gray	HOLD	Market is fairly priced
-3% to -1%	Light red	Hold	Slightly overpriced
< -3%	Red	Don't buy	Market is overpriced

Why 3%?

The 3% threshold accounts for:

• Trading fees on Polymarket

• Slippage from orderbook depth

• Model uncertainty — no model is perfect

Below 3%, the potential profit may not justify the costs and risks.

Edge Changes Over Time

Edge is not static — it changes every second as prices move:

• Edge grows when: the crypto spot price moves in the predicted direction but the Polymarket price hasn't caught up yet

• Edge shrinks when: the Polymarket market corrects toward fair value

• Edge flips when: the spot price reverses direction

APY (Annualized Return)

The dashboard shows an APY column that extrapolates the edge to a yearly return:

APY = Edge x (minutes per year / minutes to expiry)

APY is for comparison only, not an expected return. The numbers can look extreme (e.g., hundreds of thousands of percent for a 5-minute market) because the formula assumes the same edge is available continuously for a full year — which never happens in practice.

Use APY to compare opportunities with each other: a 5m market at 5% edge has a higher APY than a 1h market at 5% edge, because you could theoretically trade it more frequently. But don't interpret APY as money you'll actually make.

Depth Profit

Depth Profit shows how much total profit is available in the orderbook right now, accounting for fees. It walks through each price level in the orderbook below fair value and sums up the profit.

This helps you gauge: "Is there enough liquidity to actually capture this edge?"

• High depth profit = plenty of liquidity, good opportunity

• Low depth profit = thin orderbook, may not be worth it