Prediction Markets Need to Know - FAQ

Prediction Markets Are Live Probability Markets

Prediction Markets are live, continuously moving probability markets. Unlike traditional futures, you're not trading the price of an underlying asset. You're trading the market's current estimate of the likelihood that an event will occur.

As new information enters the market and market participants adjust their expectations, prices can change in real time, often second by second.

What Are Prediction Markets?

Prediction Markets allow users to take positions on the probability of future outcomes.

Instead of trading the price of an asset like futures, you are trading the market's current expectation of whether an event will happen.

Examples include:

Will an event happen?
Will a team win?
Will a specific outcome occur?

The market price represents the current probability assigned to that outcome.

Example:

A YES contract trading at $0.65 suggests the market currently estimates approximately a 65% probability that the outcome will occur.

A NO contract trading at $0.35 suggests the market currently estimates approximately a 35% probability that the outcome will not occur.

Prices continuously adjust as new information becomes available and market expectations change.

How Do Prediction Markets Move?

Prediction Markets are live, constantly moving markets.

Prices can change second by second based on:

New information
Market sentiment
Buying and selling activity
Changes in perceived probability
Supply and demand

Unlike traditional futures, where you are trading the movement of an underlying asset, Prediction Markets are driven by the collective expectations of market participants.

The market is constantly asking one question:

"What is the probability of this outcome happening right now?"

As that probability changes, the market price changes.

Are Prediction Markets the Same as Futures Trading?

No.

Prediction Markets operate differently from futures markets.

Futures trading involves buying or selling contracts tied to the price of an underlying asset, such as:

S&P 500 Futures
Crude Oil Futures
Gold Futures
Currency Futures

Prediction Markets are based on the probability of an outcome occurring.

While both involve market analysis, entering positions, managing risk, and reacting to price movement, the pricing mechanics are different.

Prediction Markets use probability-based pricing rather than pricing tied directly to the value of an underlying asset.

What Does the Contract Price Mean?

The contract price represents the market's current estimate of the probability that an event will occur.

For example:

A YES contract trading at $0.72 suggests approximately a 72% probability that the event will happen.
A NO contract trading at $0.28 suggests approximately a 28% probability that the event will not happen.

As expectations change, contract prices change.

Why Did My Price Change Before I Entered?

Prediction Markets are active markets.

The price displayed reflects the current market probability at that exact moment.

Because prices update continuously:

The market may move while you are reviewing a trade.
Your execution price may differ from the price you initially saw.
During active markets, prices can move several cents within seconds.

This is normal market behavior.

Think of the price as a live probability estimate rather than a fixed quote.

Are There Commissions or Fees?

Yes.

Prediction Market trades may include applicable trading fees.

Any applicable fees are displayed before you confirm your trade. Always review your trade details before submitting an order.

How Are Prices Determined?

Prices are determined by market participation.

As users buy and sell contracts, the market continuously updates the probability assigned to an outcome.

Generally:

Increased buying interest on one side may cause prices to rise.
Increased selling interest may cause prices to fall.

The market price reflects the current consensus probability based on ongoing trading activity.

Why Does the Price Move Even When Nothing Happened?

Markets don't only react to confirmed events.

Prices can move because market participants are constantly adjusting their expectations.

Price changes may occur because:

New information becomes available
Market participants change their expectations
More buyers enter the YES or NO side of the market
Overall market sentiment shifts

The market is continuously reassessing the likelihood of an outcome.

Can I Exit My Position Before the Market Resolves?

Yes.

Depending on the specific market rules, you may close your position before the event reaches its final outcome.

Some users choose to hold until settlement, while others exit earlier to realize gains or manage risk.

Always review the market details before entering a trade.

What Happens When a Market Resolves?

Once the outcome has been officially determined according to the market's resolution rules, contracts are settled based on the final result.

Each market includes its own resolution criteria. Be sure to review those rules before placing a trade.

Why Does Prediction Trading Feel Different Than Futures?

Because it is a different type of market.

Futures traders typically focus on:

Price movement
Technical analysis
Order flow
Market structure

Prediction Market participants often focus on:

Probability
Information
Sentiment
Expected outcomes

The analytical skills overlap, but the mechanics behind price movement are fundamentally different.

Important: Prediction Markets Are Fast Moving

Prediction Markets are dynamic, continuously updating markets.

A contract trading at $0.50 may move to $0.55 or $0.45 moments later as new information and trading activity influence market expectations.

Always understand the market mechanics before entering a position.

Prediction Markets vs. Futures

	Futures Trading	Prediction Markets
What you trade	Price movement of an underlying asset	Probability of an outcome
Price represents	Market value	Market probability
Primary driver	Asset price movement	Changing expectations and probability
Movement	Tick-based	Probability-based
Main focus	Technical analysis, price action, order flow	Probability, information, sentiment
Example	Will the S&P 500 move higher?	Will a specific event occur?

Key Takeaway

Prediction Markets are not static wagers.

They are live, continuously moving markets where prices reflect the collective expectations of market participants in real time.

As new information becomes available and expectations change, prices adjust accordingly. Understanding that you're trading probability, rather than the price of an underlying asset, is the key to understanding how Prediction Markets work.