Learn About Prediction Markets

Looking to learn more about prediction markets? You've come to the right place.

Learning Hub for Prediction Markets

New to prediction markets? You’re not alone. Welcome to the main learning hub for foundational topics around prediction markets, tailored for financial professionals and new to intermediate traders.

Here, you’ll find educational guides on a wide range of topics around future event contracts.

For deeper dives on these foundational topics, head to our topical guides to learn more.

  • What are prediction markets?
  • History and legal foundations
  • Forecasting ability and accuracy
  • Understanding prediction market pricing
  • Market integrity safeguards
  • Trading strategies
  • How are markets resolved?
  • Kalshi lawsuits timeline
  • Fee structures and pricing mechanism

How prediction markets work

  • Trading: Participants buy and sell contracts representing event outcomes. The price of a contract (e.g., $0.70) implies the market’s consensus probability (70%) that the event will occur.
  • Resolution or Settlement: After the event, contracts settle at $1 (if the event occurs) or $0 (if it does not). Each market has resolution criteria that outlines conditions that must be met for a market to resolve as “Yes” or “No.”
  • Liquidity: Active participation is crucial for accurate price discovery and efficient markets.

Why use prediction markets?

  • Collective Intelligence: Aggregates diverse knowledge, often outperforming expert forecasts due to the “wisdom of crowds.”
  • Real-Time Forecasts: Prices update instantly with new information, providing up-to-date sentiment and probabilities.
  • Financial Incentives: Traders are motivated to act on accurate information, aligning personal gain with market accuracy.
  • Simplicity: Binary contracts are simple to understand and trade on – Traders simply choose yes or no on the possibility of a future event occurring.
  • Versatility: Applicable to politics, economics, corporate outcomes, sports, and more.

Regulatory and ethical considerations

  • Choose a regulated platform: Only trade on approved, regulated prediction market platforms to ensure your funds are safe and the markets you’re trading on have integrity monitoring procedures in place.
  • Transparency: Ensure the platform is compliant and transparent about rules and settlement procedures.
  • Responsible Trading: Set and stick to your trading limits and follow proven trading strategies to keep your investments responsible.

This hub is your starting point for mastering prediction markets—whether you seek to enhance your trading skills or leverage collective intelligence for financial insight. Explore, learn, and always trade responsibly.

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