4.6 What’s Next — Your Trading Plan
Key Takeaways
- You’ve completed a 22-module curriculum covering fundamentals, mechanics, strategy, and mastery — you know more than 95% of prediction market participants
- Knowledge without action is worth nothing — this module converts everything into a concrete 90-day plan tailored to your experience level
- The three phases of your plan: Foundation (Weeks 1–2), Validation (Weeks 3–6), Deployment (Weeks 7–12) — each with specific deliverables and go/no-go criteria
- Edge decay is real: every strategy loses potency as more people discover and exploit it. Your advantage is in execution speed, continuous learning, and adaptation
- Prediction markets are not a destination — they’re a skill that compounds. The traders who win long-term are the ones who treat this as a practice, not a gamble
Scope: This is the final module of the Predictionist School curriculum. It synthesizes everything into an actionable roadmap. No new concepts — just application. This is where theory becomes real.
What You’ve Learned: The Complete Map
Before looking forward, here’s what you’ve built across four levels:
Level 1: Fundamentals
You understand what prediction markets are, how pricing works, where to trade, and why most people lose money. You have realistic expectations and healthy respect for the risks.
Level 2: Mechanics
You understand how markets actually function: order books, resolution, friction, signals, and cross-platform differences. You can calculate your true cost of trading and read market microstructure.
Level 3: Strategy
You have five distinct strategic approaches: arbitrage, data-driven trading, bias exploitation, fundamental analysis, and market making. You know which applies to which market type and how to evaluate expected value.
Level 4: Mastery
You have a documented trading system, a trading journal, portfolio construction rules, psychological countermeasures, and the superforecaster mindset. You have the infrastructure to learn from your own experience.
This is a complete toolkit. Not a shortcut to profit — a complete, honest, evidence-based toolkit for approaching prediction markets with professionalism. What you do with it is up to you.
Your 90-Day Plan
Phase 1: Foundation (Weeks 1–2)
Goal: Set up your infrastructure before trading a single dollar.
| Day | Task | Reference |
|---|---|---|
| 1 | Create accounts on 2 platforms (Polymarket + one other based on your jurisdiction) | Module 1.5 |
| 2 | Fund each account with your planned starting bankroll (we recommend $500–$2,000 to start) | Module 1.4 |
| 3 | Create your trading journal spreadsheet with 10 required columns | Module 4.2 |
| 4 | Write your trading system on a single page (selection filters, entry criteria, sizing rule, exit rules) | Module 4.1 |
| 5–7 | Choose your primary strategy and study the relevant module deeply | Level 3 |
| 8–10 | Set up data sources and tools for your chosen strategy | Module 3.3 data sources |
| 11–14 | Paper trade: identify 5 markets through your system, log hypothetical entries | Module 4.1 paper trading protocol |
Phase 1 Deliverables:
- Funded accounts on 2 platforms
- Trading journal with column headers
- Written trading system (1 page)
- 5 paper trade entries logged
Go/No-Go: If you can’t articulate your strategy, your edge source, and your sizing rule, don’t proceed. Revisit the relevant modules.
Phase 2: Validation (Weeks 3–6)
Goal: Validate your system with small, real positions.
| Week | Focus | Details |
|---|---|---|
| 3 | First 5 live trades at 25% of normal position size | Max $25 per position on a $2,000 bankroll. Focus on execution, not profit |
| 4 | Next 5 live trades — same reduced sizing | Log everything. Follow your system exactly. Note every temptation to deviate |
| 5 | Review first 10 trades against your journal | Calculate preliminary P&L. Check system compliance. Did you follow the rules? |
| 6 | If passing → increase to 50% of normal sizing for 5 more trades. If failing → diagnose and remain at 25% | The escalation is earned, not timed |
Phase 2 Deliverables:
- 15 real trades logged with all 10 fields
- Preliminary P&L calculation
- System compliance audit (how many trades followed all rules?)
- First emotional pattern assessment
Go/No-Go criteria for Phase 3:
| Metric | Pass | Fail |
|---|---|---|
| System compliance | ≥80% of trades followed all rules | <80% — you’re overriding your system |
| P&L direction | Breakeven or positive | Significantly negative (>10% loss) |
| Journal discipline | Every trade logged before outcome | Missing entries or post-hoc edits |
| Emotional stability | No revenge trades, no FOMO entries | Multiple emotion-driven decisions |
Phase 3: Deployment (Weeks 7–12)
Goal: Full system operation with standard position sizing and diversified portfolio.
| Week | Focus |
|---|---|
| 7–8 | Scale to full position sizing (Quarter Kelly, 5% cap). Expand to 10+ active markets across multiple categories |
| 9–10 | Build portfolio diversification: check correlation matrix, balance categories and time horizons |
| 11 | Monthly review: Brier score calculation, strategy attribution, edge assessment |
| 12 | Quarterly review: Full performance audit. Decision — continue, modify, or stop |
Phase 3 Deliverables:
- 30+ trades logged
- First Brier score calculated
- Portfolio diversification check completed
- 90-day performance report written
The Decision at Day 90
After 90 days, you’ll have enough data to answer the only question that matters:
Are you generating positive expected value after friction?
If Yes:
Congratulations — you have a validated system. Your next steps:
- Gradually increase bankroll — add capital in 25% increments every 30 profitable days
- Add a second strategy — if you started with data-driven, add bias exploitation or fundamental analysis
- Specialize — identify which market categories you’re best at and focus there
- Track edge decay — monitor whether your strategies are becoming less profitable over time
If No:
This is not failure — this is valuable information. Your next steps:
- Analyze why. Is it the strategy (wrong approach for these markets), the execution (not following your system), or the sizing (too aggressive)?
- Reduce to paper trading for another 30 trades while you fix the identified issue
- Consider switching strategies. Not every strategy suits every person. If data-driven trading isn’t working, try bias exploitation or fundamental analysis
- Accept the possibility. Some people conclude after an honest 90-day test that prediction markets are not a positive-EV activity for them. That conclusion — reached through disciplined testing rather than emotional blow-up — is a victory, not a defeat. You’ve lost a small, controlled amount and gained a definitive answer
Edge Decay: The Long-Term Reality
Every edge in every market eventually decays. Here’s why and what to do about it:
Why Edges Decay
- Discovery. Other traders find the same patterns you’re exploiting — and competition reduces the mispricing
- Platform changes. Fee structures, liquidity, and resolution rules evolve — changing the friction landscape
- Market maturation. As prediction markets grow and attract more sophisticated participants, easy opportunities disappear first
- Regulatory shifts. Changes in who can trade, what’s available, and how profits are taxed alter the playing field
How to Monitor Edge Decay
| Signal | What It Means |
|---|---|
| Shrinking spreads on arb opportunities | More arb traders competing for the same opportunities |
| Your Brier score staying flat while your P&L declines | Your estimates are still accurate but the market is pricing more efficiently — less mispricing to exploit |
| Increasing slippage relative to historical levels | More competition for the same liquidity |
| Lower hit rate on longshot bias trades | The favorite-longshot bias is being arbitraged away by other traders exploiting it |
How to Adapt
- Continuously learn. New market categories, new platforms, and new event types create fresh mispricings
- Build informational edge. Deep expertise in a specific domain (e.g., central bank policy, specific regulatory topics) is harder to compete away than mechanical strategies
- Improve speed. Better tools, better data sources, and faster execution extend the life of existing strategies
- Be early. When a new prediction market platform launches, early participants face less competition
Tax and Legal Considerations
This is not tax advice. Consult a qualified tax professional in your jurisdiction. That said, here are the key areas you must be aware of:
U.S. Residents
| Platform | Likely Tax Treatment | Key Consideration |
|---|---|---|
| Kalshi | Section 1256 contracts (60/40 long-term/short-term capital gains split) | Favorable tax treatment; form 1099 issued |
| Polymarket | Crypto capital gains (short-term or long-term depending on holding period) | You must track your own cost basis; no 1099 issued |
The “phantom income” trap: Under proposed regulations (OBBBA 2026), gains on certain event contracts may be subject to a 90% cap on loss offsetting. Consult your tax advisor about how this affects your portfolio.
European Residents
- Treatment varies by country. Some jurisdictions treat prediction market gains as gambling winnings (often tax-free); others treat them as financial gains (taxed at capital gains rates)
- MiFID II classification of certain prediction market contracts as financial instruments may apply
UK Residents
- Currently regulated by the Gambling Commission, not the FCA
- As of April 2027, a 25% Remote Betting Duty may apply to operators — which could affect market pricing and availability
- Gambling winnings are generally tax-free for individuals in the UK
Record-Keeping
Regardless of jurisdiction, maintain records of:
- Every trade (your journal covers this)
- Deposits and withdrawals to/from platforms
- Platform fee receipts
- Currency conversion records (especially for crypto-denominated platforms)
The Predictionist School Promise
We built this curriculum on three principles:
- Brutal honesty. We told you that 70% of traders lose money. We showed you the data on retail performance. We didn’t sugarcoat the difficulty or promise easy returns
- Research-backed content. Every framework, strategy, and rule in this curriculum is grounded in empirical evidence — academic research, platform data, and real-world observation
- Actionable education. Every module gave you something to do, not just something to know. Your trading system, journal, portfolio rules, and 90-day plan are tangible outputs
Whether you trade $500 or $500,000, whether you focus on arbitrage or fundamental analysis, whether you use Polymarket or Kalshi — the principles in this curriculum will serve you.
The edge is not in the information. The information is free. The edge is in the discipline to apply it consistently when emotion tells you to do otherwise.
Good luck. Trade smart. Stay honest.
Resources
Essential Reading
- Philip Tetlock & Dan Gardner — Superforecasting: The Art and Science of Prediction (2015)
- Nate Silver — The Signal and the Noise (2012)
- Annie Duke — Thinking in Bets (2018)
Prediction Practice Platforms
- Metaculus — forecasting tournaments with calibration tracking
- Good Judgment Open — based on Tetlock’s original research platform
- Manifold Markets — play-money prediction markets for practice
Predictionist Resources
- Platform Directory — detailed reviews and comparisons
- Tool Directory — analytics, bots, and signal tools
- Predictionist Blog — ongoing analysis and market commentary
- Community — connect with other evidence-based traders
🎯 Try This Now: Open a blank document and write the answers to these three questions: (1) What is my primary strategy? (2) What is my starting bankroll, and what is my maximum single-position size (5% of it)? (3) What are the first 3 markets I want to analyze through my system? These three answers are the seed of your trading plan. Tape them to your monitor. Begin Phase 1 tomorrow.
You’ve completed the Predictionist School curriculum. Thank you for investing the time to learn this properly.
Predictionist School is a free educational resource from Predictionist.com. We may earn referral commissions from platforms we recommend — see our disclosure policy for details. This content is for educational purposes only and does not constitute financial advice.