Prediction Market
A market where contracts trade on the outcome of future events.
A prediction market trades contracts on the outcome of future events.
A prediction market lets traders buy and sell contracts on the outcome of future events, from elections to economic releases. Prices reflect the market estimate of how likely an outcome is. They offer a different risk profile from price trading and are a distinct asset class.
How It Works
- Prices reflect estimated probability
- It covers elections, sports and releases
- It is a distinct asset class
Trading Tips
Understand the event and the contract before trading
Size for binary outcomes, not gradual moves
Compare prices across platforms for value
Prediction Market Example
Say election contracts price Candidate A at 62 cents days before the vote. That price is the crowd 62% probability. Polls shift, the contract swings to 45 cents, and traders who read turnout data early double money.
How Traders Use Prediction Market
Trade prediction markets on information edges, not opinions: turnout models, early counts, base rates. Prices reflect crowds, and crowds misprice late news systematically. Size small. Resolution disputes happen.
Related Terms
Put Your Knowledge Into Practice
Compare regulated brokers and find the best one for your trading style.