THE 3 FORMULAS TO WIN ON POLYMARKET 1. Avellaneda-Stoikov - the foundation of every quant market making desk Reservation price: r = s - q x γ x σ² x (T - t) Optimal spread: δ = γσ²(T-t) + (2/γ) x ln(1 + γ/κ) Adapted to prediction markets via log-odds: logit(p) = ln(p / 1-p) 2. Empirical Kelly with Monte Carlo - sizing without ruin Naive Kelly assumes you know your edge exactly. You don't. Run 10,000 Monte Carlo paths. Target the 95th percentile drawdown. f_empirical = f_kelly x (1 - CV_edge) High uncertainty = aggressive haircut to position size. 3. VPIN - detecting when informed traders are in the market VPIN = |V_buy - V_sell| / (V_buy + V_sell) VPIN rising: widen spreads. VPIN spiking: withdraw quotes entirely. There is no spread wide enough to quote into fully informed flow. Full breakdown of all 5 formulas in the article below👇