What is a prediction market?
A prediction market lets you trade on the result of an event. Each one has a question, possible outcomes, a closing time, and rules for choosing the winner.
Price as probability
Section titled “Price as probability”Outcome prices normally run from $0.00 to $1.00. Traders often read the price as the market’s implied probability.
- A Yes price of $0.42 implies roughly a 42% chance.
- If Yes resolves as the winner, each winning share pays $1.00.
- If Yes loses, each Yes share pays $0.00.
That number reflects current buying and selling. It is not a forecast or guarantee.
A simple example
Section titled “A simple example”Suppose you spend $42 to buy 100 Yes shares at an average price of $0.42.
| Result | Settlement value | Profit or loss before fees |
|---|---|---|
| Yes wins | $100 | +$58 |
| Yes loses | $0 | -$42 |
If there aren’t enough shares available at the best price, your average price will be higher. The quote shows the estimate for your full order.
The rules decide the winner
Section titled “The rules decide the winner”Before trading, check:
- The exact market question.
- The resolution criteria.
- The named resolution source.
- The closing or expected resolution date.
- Any special conditions or exceptions.
Two markets can sound almost identical and still resolve differently because they use different dates, definitions, or sources.
Closing is not resolution
Section titled “Closing is not resolution”Closing only stops new trades. The market can remain unresolved while its named source confirms the result. See Resolution and redemption for what happens next.