> ## 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.

# Understanding Market Prices

> Learn how prices work, what they mean, and how to interpret them

## How Market Prices Work

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

## Price Basics

### 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)

### Price Interpretation

The price represents the market's collective probability:

| YES Price | Market Probability | Interpretation |
| --------- | ------------------ | -------------- |
| 10        | 10%                | Very unlikely  |
| 25        | 25%                | Unlikely       |
| 50        | 50%                | Coin flip      |
| 75        | 75%                | Likely         |
| 90        | 90%                | Very likely    |

<Tip>
  If YES is at 75, the market collectively believes there's a 75% chance the event will happen.
</Tip>

## Understanding Price Values

### 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

### 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¢

### 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¢**

<Note>
  Buying at lower prices gives you higher potential profit, but also means the market thinks it's less likely to happen.
</Note>

## 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

### 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

<Tip>
  Prices can move quickly when new information arrives. Stay informed about the markets you're trading.
</Tip>

## Reading Price Charts

### 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

### 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

### 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

## Price and Probability

### 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

### 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

<Warning>
  If you think the event has exactly a 60% chance and the price is 60, your expected value is zero. To profit consistently, you need to find markets where you believe the price is wrong.
</Warning>

## Price Strategies

### Buying at Low Prices

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

### Buying at High Prices

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

### 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

## Common Price Scenarios

### 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

### 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

### 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

## Next Steps

<CardGroup cols={2}>
  <Card title="Start Trading" icon="hand-holding-dollar" href="/user-guide/trading-basics">
    Learn how to place orders at different prices.
  </Card>

  <Card title="Trading Strategies" icon="lightbulb" href="/user-guide/trading-strategies">
    Learn strategies for trading at different price levels.
  </Card>
</CardGroup>