Prediction Market
A market where contracts trade on the outcome of future events.
Quick answer
A prediction market trades contracts on the outcome of future events.
Definition
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
1
Understand the event and the contract before trading
2
Size for binary outcomes, not gradual moves
3
Compare prices across platforms for value
Related Terms
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