Calculator
This calculator is meant to be used before execution, not as post-trade analysis. The purpose is to stop you from calling a setup profitable until the full cost structure says it is.
Pair pricing
Enter both complementary legs, the settlement payout, reserved capital, and any fixed cash costs.
Execution assumptions
Use executable prices, not wishful top-of-book prices.
Table of Contents
How arbitrage net edge is calculated
Start with the gross edge per pair: payout minus the combined contract prices. That is the clean mathematical spread if both legs fill exactly where you think and there are no other costs.
Then subtract variable friction on both legs, such as fee rates and slippage assumptions, plus any flat cash costs like withdrawals or transfer overhead. The result is the net edge per pair, which is the number that actually matters.
- Gross edge identifies the theoretical mispricing.
- Variable costs scale with size and price.
- Flat costs matter more when the trade is small.
- Net edge is the decision metric, not gross edge.
How to use the arbitrage tool properly
Use executable prices, not wishful prices. If the best displayed quote is only available for a tiny amount, model the price you expect to pay at the size you are actually planning to trade.
Your bankroll input should reflect capital already available to the setup. If funds still need to be moved between venues, include that friction and be conservative about whether the window will remain open long enough.
- 1Enter both leg prices and the standard payout per matched pair.
- 2Add fee and slippage assumptions for each leg separately.
- 3Include flat movement or withdrawal costs.
- 4Check whether the net edge still clears your minimum threshold.
Worked arbitrage example
Suppose one leg costs $0.41, the complementary leg costs $0.54, and the standard payout is $1.00. Gross edge is 5 cents per pair. That sounds attractive until you layer in taker fees, slippage on both books, and the fixed cost of moving or withdrawing capital.
The calculator shows whether the 5-cent headline edge remains meaningful after those deductions and how much total profit is actually left at your bankroll size. In many real setups, that answer is smaller than traders expect.
- A gross edge can be positive while the net edge is weak or negative.
- Bankroll only helps if enough executable size exists at the entered prices.
- The output is only as good as the execution assumptions you feed it.
The arbitrage mistakes that usually kill profit
The biggest mistake is trusting top-of-book quotes without checking depth. The second is ignoring flat costs because they look small relative to one pair, even though they can wipe out a modest setup once the math is done honestly.
Another major mistake is focusing on cost math without doing any resolution review. A net edge is meaningless if the two contracts are not actually complementary at settlement.
- Ignoring book depth and realistic fill quality
- Using aggressive slippage assumptions that only work at tiny size
- Treating gross edge as if it were deployable profit
- Skipping rule parity checks across venues
If a setup only works under optimistic slippage, it should usually be rejected. Net edge should survive conservative execution assumptions, not depend on perfect fills.
Sources
These references support the assumptions and workflow guidance on this page. Always verify current platform rules before relying on a calculator preset.
Internal guide on the math, execution flow, and operational risks of arbitrage setups.
Official fee documentation needed when modeling real arbitrage friction.
Kalshi fee documentation used when comparing all-in arbitrage cost between venues.
Frequently Asked Questions
Short, practical answers to the questions readers usually ask after learning how prediction markets price, trade, and settle.