Adverse selection

The problem that the orders which fill you are disproportionately the ones you should not have wanted.

Rest an offer to sell YES at 45¢ and it sits untouched while nothing is happening. It gets lifted the instant somebody works out that the contract is worth more than 45¢. Your fills are therefore concentrated in the cases where you were wrong, not distributed evenly across the cases where you were quoting.

That bias is a real cost, and it is what the spread is charging for. It is also why a maker fee saving is not free money: you are being paid to accept selection risk, and if you price as though the risk were absent you will lose steadily while every individual trade looks fine. It explains the common experience of a resting-order strategy that backtests beautifully on mid prices and underperforms in production, because a backtest fills you at every level you quoted and reality only fills you at the ones that hurt.

For a taker the mirror question applies, and it is a good habit: when a book seems unusually eager to sell you something, ask what the seller might know. Every flow signal on this site is ultimately an attempt to detect the informed side of this problem from the outside — which is exactly why none of them can ever be certain.

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Definitions describe how Polymarket and Kalshi behave and how WhaleTracks models them; venue rules and fee schedules can change, so confirm anything you size a position on with the venue itself. WhaleTracks is informational analytics, not financial advice. Past performance does not guarantee future results.