Bankroll
Bankroll is the pool of capital you allocate for trading, with rules that protect you from drawdowns and ruin.
Definition
Bankroll is the capital you set aside for trading. Good bankroll rules separate trading money from living money and define limits that reduce risk of ruin.
Why it matters
Prediction markets have bounded payoffs but real frictions. Trading fee, bid ask spread, and slippage can turn small edges into losses. A bankroll plan keeps you alive long enough for skill to show up.
Practical guidance
• Decide a dedicated bankroll and treat it as risk capital.
• Set position limits using position sizing.
• Reduce size when liquidity is thin or spreads widen.
Common pitfalls
Trading too large relative to bankroll: Even short bad runs can wipe you out.
Chasing losses: Increasing size after losses increases ruin risk.