How to Scan Prediction Market Orderbooks: Spread, Depth, and Liquidity Analysis

Why Orderbook Analysis Matters for Prediction Markets

Edge detection is not enough. You can find a market where your thesis implies 65¢ but the market trades at 40¢ — a theoretical edge of +25¢. But if the spread is 15¢ and depth is 50 contracts, your actual fill will be terrible.

Orderbook analysis tells you whether an edge is executable.

Key Metrics

Spread

The difference between best bid and best ask. In prediction markets:

• ≤ 2¢: Tight spread, high conviction market
• 3-5¢: Moderate spread, tradeable
• > 5¢: Wide spread, illiquid — proceed with caution

Depth

Number of contracts on the top 3 price levels. More depth = more contracts you can trade without moving the price.

Liquidity Score

We score markets as:

• High: Spread ≤ 2¢ AND depth ≥ 500 contracts
• Medium: Spread ≤ 5¢ AND depth ≥ 100 contracts
• Low: Everything else

Executable Edge

The real edge after accounting for the spread:

YES buyer: executableEdge = thesisPrice - askPrice
NO buyer:  executableEdge = bidPrice - thesisPrice

A market with +25¢ theoretical edge but 10¢ spread has only +15¢ executable edge.

Scanning Orderbooks with the CLI

Single Market Deep Dive

sf book KXWTIMAX-26DEC31-T135

Output:

KLSH Will the maximum WTI front month settle price reach $135.01 by Dec 31, 2026?
KXWTIMAX-26DEC31-T135

  Last 47¢  Bid 48¢  Ask 49¢  Spread 1¢  Liq high
  Vol24h 3K  OI 31K  Expires 2026-12-31

  BID                 ASK
  ──────────────────────────────────────
    48¢       59    49¢      527
    47¢      578    50¢      332
    45¢       10    51¢      400
    44¢      194    52¢      746
    37¢       11    53¢      500
  depth: 14406 bid / 13262 ask

Topic-Wide Liquidity Scan

sf liquidity oil          # All oil-related markets
sf liquidity crypto       # All crypto markets
sf liquidity geopolitics  # Iran, Hormuz, etc.
sf liquidity              # List all 18 available topics

Polymarket Markets

sf book --poly "oil price above 100"
sf book --poly "iran war ceasefire"

Cross-Venue Comparison

sf scan "oil" --venue all  # Search both Kalshi + Polymarket

Reading the Signals

Spread Widening

If a market's spread was 2¢ yesterday and is 8¢ today, market makers are withdrawing — uncertainty is rising.

Depth Imbalance

If bid depth is 3x ask depth, buyers are more aggressive. The market may be about to move up.

Volume Spike Without Price Move

High volume but stable price means large orders are being absorbed — someone is providing serious liquidity at current levels.

Automating Orderbook Monitoring

SimpleFunctions' heartbeat engine monitors orderbooks every 15 minutes for all your thesis edges:

• Persists snapshots to database for time-series analysis
• Generates commentary: "spread widening", "buyers aggressive", "sell-side depth dropped 40%"
• Recalculates executable edge from live orderbook data

# Set up autonomous monitoring
sf create "Oil will exceed $120 by end of 2026"
# Heartbeat engine automatically scans orderbooks every 15 min
sf context <id> --json  # See latest orderbook signals in edges

Tools

• sf book: Deep dive on specific markets
• sf liquidity: Topic-wide liquidity scan
• sf scan: Cross-venue market search
• MCP: claude mcp add simplefunctions for AI agent access