Understanding Prediction Markets

A beginner-friendly guide to reading market probabilities and making sense of the data

What Are Prediction Markets?

Prediction markets are places where people use real money to bet on whether future events will happen. Think of it like a stock market, but instead of trading company shares, people trade shares that pay out if a specific event occurs.

Simple Example:

"Will it rain tomorrow?" - Market shows 70%

  • • YES shares cost $0.70 and pay $1.00 if it rains
  • • NO shares cost $0.30 and pay $1.00 if it doesn't rain
  • • The 70% tells you what traders believe is the chance of rain

Because people are risking real money, they tend to research carefully and bet on their honest beliefs. This often makes prediction markets more accurate than polls or guesses.

How to Read Market Pages

Each market page shows you everything you need to understand what traders think will happen. Here's what the key sections mean:

Market Snapshot

The snapshot gives you a quick summary of what's happening right now in the market.

  • Current Odds: The percentage showing what traders believe is the probability
  • Volume: Total money bet on this market (higher = more confident traders)
  • Participants: Number of traders who have made bets
  • Resolution Date: When we'll know the answer and the market closes

Understanding Probabilities

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Binary Markets (YES/NO)

Simple yes or no questions. If it shows 65%, traders think there's a 65% chance YES happens.

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Multi-Outcome Markets

Multiple possible answers. Each outcome shows its own probability. All probabilities add up to 100%.

Trading Volume

Higher volume means more money at stake and usually more reliable odds. Look for markets with at least $10K+ volume.

Number of Traders

More traders means more diverse opinions and perspectives factored into the probability.

Using the News Feed

Each market page includes recent news articles related to the topic. This helps you understand what's driving the probabilities.

Why News Matters

  • Breaking news can rapidly change market probabilities
  • Multiple sources give you different perspectives on the same event
  • Reading news helps you understand why traders are betting the way they are

Pro Tip

If you see the market probability shift suddenly, check the news section. Often there's a recent article that explains why traders changed their minds.

What Makes a Good Market to Follow

High Trading Volume

Markets with more money bet (over $100K) tend to have more reliable probabilities because more traders have researched and committed capital.

Look for: Markets with 6-7 figure volume

Many Participants

More traders means a wider range of perspectives and information. Markets with 100+ traders typically reflect better collective intelligence.

Look for: Markets with 100+ participants

Clear Resolution Criteria

Good markets have specific, unambiguous questions with objective ways to determine the outcome. Vague questions lead to disputed resolutions.

Look for: Markets with specific dates and clear outcomes

Recent Activity

Active markets with recent trades reflect current information. Stale markets may not account for recent developments.

Look for: Markets with trades in the last 24-48 hours

Tips for Beginners

1

Start with Familiar Topics

Browse markets about subjects you already understand. This helps you judge if the probabilities make sense.

2

Read the Market Snapshot First

The snapshot gives you the big picture at a glance. Start there before diving into details.

3

Look at Volume and Participants

Higher numbers mean more traders have weighed in. Markets with $100K+ volume are usually more reliable.

4

Follow the News Feed

News articles explain what's happening and why probabilities might be changing.

5

Remember: Markets Can Be Wrong

Probabilities show what traders believe, not what will definitely happen. Use them as one input among many.

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