Traders wildly underestimate variance. This simulator runs your edge through 1,200 seasons of trades and shows the full spread of where you could land, from the unlucky runs to the lucky ones.
The lesson lands fast: even a genuine, provable edge produces losing seasons a meaningful share of the time. Seeing forty possible paths fan out from the same edge is the fastest cure for over-reacting to a single hot or cold stretch.
40 simulated seasons · each line is one possible run of your edge · green ends up, red ends down
Seasons that end profitable
95%
Typical outcome (median)
+$300
Unlucky season (10th pct)
+$80
Lucky season (90th pct)
+$520
Worst of 1,200 seasons
$-440
Edge per trade
+$1.00
Even with a genuine edge, roughly 5 out of 100 seasons still end in the red, purely from variance. That's why one losing stretch proves nothing, and why sizing to survive the downswings matters more than any single trade. To see whether your real record shows an edge, run the edge significance calculator or the Edge Lab.
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Why a real edge still loses sometimes
Each trade is a coin flip weighted slightly in your favor. Over a season, the weighting wins on average, but the individual flips still cluster into streaks. String enough bad flips together and even a solid edge ends the year red. The simulator shows exactly how often that happens.
The narrower your edge, the more seasons end down. A 60 percent win rate at even prices rarely loses over a few hundred trades; a 52 percent edge loses a third of the time. The green fan and the profitable-seasons percentage make that concrete.
What to do with it
First, stop over-reacting to short runs. A losing month inside a winning edge is completely normal, and the simulator shows you it's expected. Second, size to survive the downswings you see in the red paths, because the trader who blows up in a bad stretch never collects the edge.
Then confirm you actually have the edge you're simulating. Plug your real record into the edge significance calculator, or run the full Edge Lab, before you trust that your win rate is real rather than its own lucky season.
FAQ
Can you have a real edge and still lose money?
Yes. Over a season, variance produces losing streaks even for a genuine edge. A modest edge can end the year down a third of the time or more, purely from the luck of the draw, which is why one bad stretch proves nothing.
How much does variance affect prediction-market results?
Enormously over small samples. The same edge can produce a wide range of season outcomes, from large losses to large gains. This simulator shows the full spread so you can see how much of any single result is luck.
Why does sizing matter if I have an edge?
Because an edge only pays out if you survive the downswings to collect it. Betting too large means a normal losing streak can wipe you out before your edge compounds. Sizing to survive the red paths is what turns an edge into money.
How is this simulated?
It runs a Monte Carlo: 1,200 seasons of your chosen number of trades, each trade won with your stated win rate and paid out at your entry price. The results show the distribution of ending outcomes and a sample of possible equity paths.
Stop calculating one trade at a time
ContractTax does this across your whole Kalshi history: real P&L, a Sharp Score that rates your edge, and your tax numbers under every treatment.
These tools are for education and estimation only, not financial or tax advice. Fee estimates use Kalshi’s standard formula and may differ from your actual fees.
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