Prediction Market Guides

A prediction market is a marketplace where participants buy and sell contracts on the outcome of future events. Think of it like a stock market — but instead of trading shares of companies, you trade on whether specific events will happen.

Each contract settles to $1.00 if the underlying event occurs ("YES") or $0.00 if it doesn't ("NO"). The price at any moment represents the market's consensus probability.

Prediction markets aggregate information from thousands of participants, each with their own research and analysis. Traders who are consistently wrong lose money; those who are right profit. This financial incentive creates the "wisdom of crowds" — where collective judgment of many self-interested participants often outperforms any individual expert.

"Prediction markets aggregate information in a way that no individual expert can replicate. The price is the forecast." — Paul Tetlock, author of Superforecasting

• • You can lose your entire stake. If you bet YES and the event doesn't happen, you lose 100% of that position.
• • Liquidity risk. On smaller markets, you may not be able to exit at a favorable price.
• • Platform risk. Offshore platforms carry counterparty risk. Prefer regulated venues for larger amounts.
• • Resolution disputes. Read the fine print on each contract.