Trading Volume in Prediction Markets
Volume measures trading activity. A market with 10,000 contracts traded in the past 24 hours is more active than one with 50. But volume alone doesn't tell you everything — you need to consider it alongside open interest and spread.
Volume Patterns
Volume typically spikes around:
- Catalysts: Economic data releases (CPI, jobs numbers, GDP), elections, FOMC meetings
- Price moves: A sudden price change attracts attention and trading
- New information: Major news events drive volume as traders update their positions
Volume and Liquidity
High volume markets are generally easier to trade because:
- Spreads tend to be tighter (more competition)
- Large orders fill with less slippage
- Market makers are more active
However, volume can be misleading. A market might have a one-time volume spike from a single large trader, then return to low activity.
Using Volume in SimpleFunctions
When you run sf scan, markets are sorted by a combination of edge, volume, and liquidity. High-edge markets with zero volume are flagged because they may be untradeable — the edge exists on paper but you can't execute it.
Volume data is also critical for cross-venue analysis. A contract with edge on Kalshi but zero volume might have a liquid equivalent on Polymarket.