Understanding Market Prices

Documentation Index

Fetch the complete documentation index at: https://docs.predictamarkets.com/llms.txt

Use this file to discover all available pages before exploring further.

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How Market Prices Work

Understanding prices is essential for successful trading on Predicta. This guide explains everything you need to know.

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Price Basics

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YES and NO Prices

Every binary market has two prices that always add up to 100:

• YES Price: Current price to buy one YES share (0–100)
• NO Price: Current price to buy one NO share (0–100)
• Key Rule: YES price + NO price = 100 (always)

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Price Interpretation

The price represents the market’s collective probability:

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Understanding Price Values

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Cost Per Share

Prices are on a 0–100 scale representing cents per share:

• YES price = 75 → costs 75¢ to buy one YES share
• NO price = 25 → costs 25¢ to buy one NO share

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Payout Per Share

• If you’re right: each winning share pays out at full value (100¢)
• If you’re wrong: each losing share is worth 0¢

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Profit Calculation

Example 1: Buying YES at 75

• Cost: 100 shares × 75¢ = 7,500¢
• If YES wins: 100 shares × 100¢ = 10,000¢
• Profit: 10,000¢ − 7,500¢ = 2,500¢

Example 2: Buying NO at 25

• Cost: 100 shares × 25¢ = 2,500¢
• If NO wins: 100 shares × 100¢ = 10,000¢
• Profit: 10,000¢ − 2,500¢ = 7,500¢

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How Prices Change

Prices update in real-time as:

• New information arrives: Breaking news shifts prices immediately
• People place orders: Supply and demand drive prices up or down
• Trades execute: Each completed trade moves the price
• Sentiment shifts: Collective opinion changes over time

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Price Movement Example

Scenario: Breaking news makes an event more likely

• Before: YES = 50, NO = 50
• After news: YES = 70, NO = 30
• Result: Early YES buyers profit on the move; NO holders lose value

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Reading Price Charts

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Price History Chart

• YES Price Line: How the YES price has changed over time
• NO Price Line: How the NO price has changed over time
• Volume Bars: Trading activity at each point in time

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What to Look For

• Trends: Is the price moving consistently in one direction?
• Volatility: How much is the price swinging?
• Volume Spikes: When did most trading happen?
• Support/Resistance: Price levels the market keeps returning to

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Chart Patterns

Uptrend: YES price consistently rising

• Market growing more confident the event will happen
• Good time to buy YES if you agree, or consider NO if you think the market is overestimating

Downtrend: YES price consistently falling

• Market growing less confident
• Good time to buy NO if you agree, or YES if you think the market is underestimating

Sideways: Price moving in a range

• Market is uncertain, waiting for new information
• Good for range trading strategies

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Price and Probability

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Converting Price to Probability

The price directly represents probability:

• YES at 60 → 60% chance the event happens
• NO at 40 → 40% chance the event doesn’t happen

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Expected Value

Calculate expected value to make more informed decisions: Formula: (Your probability × payout) − cost Example: Buying YES at price 60, if you think the real probability is 70%:

• Expected value: (0.70 × 100¢) − 60¢ = +10¢ per share
• Positive expected value → potentially good trade

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Price Strategies

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Buying at Low Prices

Advantage: Higher profit if correct Disadvantage: Lower probability of being correct

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Buying at High Prices

Advantage: Higher probability of being correct Disadvantage: Lower profit if correct

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Finding Value

Look for markets where:

• You believe the price doesn’t reflect the true probability
• You have information or analysis others don’t
• The market is reacting emotionally rather than rationally

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Common Price Scenarios

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Near Expiration

As markets approach expiration:

• Prices tend to converge toward 0 or 100
• Uncertainty decreases
• Less opportunity for large price swings
• More certainty about likely outcome

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High Volume Markets

When volume is high:

• Prices tend to be more accurate (more information aggregated)
• More liquidity — easier to buy and sell
• Faster price movements when news breaks
• More competition from informed traders

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Low Volume Markets

When volume is low:

• Prices may be less accurate
• Less liquidity — harder to enter or exit positions
• Slower price movements
• More opportunity to find mispriced markets if you have better information

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Next Steps