Glossary

An exchange where participants buy and sell contracts tied to the outcomes of real-world events. Prices reflect the market's collective estimate of how likely each outcome is.

A tradable contract whose value is determined by whether a specific real-world event occurs. The basic unit of trading in prediction market. Sometimes simply called a "contract" or "share."

The current cost of a contract, expressed between $0 and $1. A Yes contract at $0.65 means the market estimates roughly a 65% probability the event will occur.

The probability of an event as suggested by the current market price. A contract trading at $0.72 implies a 72% probability. This isn't a guarantee — it's the market's best collective estimate at that moment.

The process by which a market's outcome is officially determined. Once the event occurs (or the deadline passes), contracts are settled: $1 to the correct side, $0 to the incorrect side.

The predefined conditions that determine how a market resolves — including the data source used, the exact definition of the outcome, and how edge cases are handled. Always read these before trading.

The specific data provider, authority, or method used to determine the outcome. For example, a market on an election result might use an official government certification as its resolution source.

The amount returned to a trader when a market resolves. Correct-side holders receive $1 per contract; incorrect-side holders receive $0.

Your current holding in a market — how many contracts you own, on which side (Yes or No), and at what average price.

The net gain or loss on your positions. Can refer to realized PnL (from closed positions) or unrealized PnL (from positions you still hold, based on current market price).

The collection of all your open positions across different markets.

The list of all outstanding buy (bid) and sell (ask) orders for a contract, organized by price. The order book is the mechanism through which buyers and sellers are matched on most platforms.

The highest price a buyer is currently willing to pay for a contract. If you want to sell immediately, you'll typically sell at or near the best bid.

The lowest price a seller is currently willing to accept for a contract. If you want to buy immediately, you'll typically buy at or near the best ask.

The difference between the best bid and the best ask. A tight spread (e.g., $0.60 bid / $0.61 ask) indicates good liquidity. A wide spread (e.g., $0.55 bid / $0.68 ask) suggests thin liquidity and higher implicit trading costs.

An order to buy or sell immediately at the best available price. Fast execution, but you accept whatever price the market offers — which may not be ideal in thin markets.

An order to buy or sell at a specific price or better. You set your maximum buy price (or minimum sell price) and wait for the market to reach it. More control, but no guarantee of execution.

When your order is matched with a counterparty and the trade executes. A "partial fill" means only some of your order was matched.

How easily you can buy or sell contracts without significantly moving the price. High liquidity means many active participants, tight spreads, and smooth execution. Low liquidity means wider spreads, larger price impact, and potential difficulty exiting positions.

The total number of contracts traded in a market over a given period. High volume generally indicates active interest and better liquidity, though volume and liquidity are not the same thing.

The total quantity of orders sitting in the order book at various price levels. A "deep" book means large orders at many prices — indicating the market can absorb sizable trades without major price movement.

The difference between the price you expected to trade at and the price you actually received. Slippage occurs most often in illiquid markets or with large market orders.

Costs charged by the platform for trading. May include per-trade fees, resolution fees (charged when a market settles), withdrawal fees, or fees on net profits. Fee structures vary significantly across platforms.

Using a prediction market contract to offset a real-world risk. For example, buying a Yes contract on a policy change that would negatively affect your business — so if the policy passes, the contract payout partially compensates your loss.

A participant (or system) that provides liquidity by continuously posting both buy and sell orders in a market. Market makers profit from the bid-ask spread and play a critical role in keeping markets functional and tradable.

A smart-contract-based system that uses a mathematical formula (such as a constant-product function) to determine prices and execute trades, rather than relying on a traditional order book.

The practice of exploiting price differences for the same or equivalent contract across different platforms or related markets. For example, if Yes on "Will X happen?" is priced at $0.55 on Platform A and $0.48 on Platform B, an arbitrageur can buy on B and sell on A to capture the $0.07 difference (minus fees). Arbitrage activity helps keep prices consistent across markets.

In decentralized prediction markets, the mechanism (often a decentralized protocol or designated reporter system) that provides the real-world data needed to resolve a market. Oracle reliability is critical — an inaccurate or manipulable oracle undermines the entire market.