Return on investment is a measure of gain or loss relative to the amount staked, usually shown as a percentage.
Last reviewed 2 December 2025 · Educational, not advice
Return on investment, often shortened to ROI, puts a result in proportion to what you put in. You take your net gain or loss, divide it by the amount staked, and read the answer as a percentage. A net gain of ten on a stake of one hundred is a return of ten percent. A loss of twenty on the same stake is a return of minus twenty percent.
The figure is popular because it lets you compare outcomes of different sizes on the same scale. To be honest about it, the net gain should be measured after fees rather than before, since fees are a real cost that reduces what you actually keep.
Return on investment is easy to quote and easy to mislead with. On its own it ignores two things that matter a great deal. The first is time. A return of ten percent earned over a year is very different from the same figure earned over a week, yet the headline number looks identical. The second is risk. A large return earned by taking large risks is not the same as a modest one earned steadily, even when the percentages match.
A single result also tells you little. One winning trade can show a high return and still come from an approach that loses over many attempts. This is why expected value, which weighs all possible outcomes by their probability, is a more careful way to think about whether a decision was sound. There is no reason to expect a positive return from prediction markets. Returns can be negative, fees work against you, and past results are not a guide to the future.
You stake one hundred and finish with one hundred and twelve before fees, a gain of twelve. The raw return looks like twelve percent. But suppose fees took two, leaving a net gain of ten. The honest return is ten percent, and the gap between the two figures is exactly the cost of trading.
Now add context. If that ten percent took six months, it is not comparable to ten percent earned in a day, and it tells you nothing about how much risk you ran to get it. The percentage is a starting point, not the whole story.
Understanding how these markets work does not make trading safe. Prediction markets can lose you money, and a confident price can still be wrong. Stake only what you can afford to lose, never to chase a loss, and never on borrowed money. If it stops feeling like a free choice, step back. In the United States you can call or text the helpline on 1-800-GAMBLER or visit ncpgambling.org.
In its simplest form you take the net gain or loss, divide it by the amount you put in, and express it as a percentage. A net gain of ten on a stake of one hundred is a return of ten percent. To be honest, the net gain should be after fees, not before.
Because it ignores time and risk. A return that took a year is not comparable to one that took a week, and a large return earned by taking large risks is not the same as a steady one. A single winning result also says little about whether an approach works over many trades.
No. There is no reason to expect a positive return. Many participants lose money, fees work against you, and a past return is not a guide to future results. Returns can be negative, and you should only ever stake what you can afford to lose.
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