Understanding Markets

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What Are Prediction Markets?

Prediction markets are platforms where you can trade shares based on the outcome of future events. The price of shares reflects the market’s collective probability that an event will occur.

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How Prediction Markets Work

1. Market Creation: Someone creates a market asking a question with a clear outcome
2. Trading: People buy and sell shares based on their beliefs about the outcome
3. Price Discovery: The price of YES/NO shares reflects the market’s collective probability
4. Settlement: When the event happens (or deadline passes), the market resolves
5. Payouts: Winners receive $1.00 per winning share they hold

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Market Types

Predicta supports several types of markets. Learn more about each:

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Market States

Markets go through different states during their lifecycle:

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Market Information

Each market displays important information:

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Basic Information

• Title: The question being asked
• Description: Detailed explanation of the market
• Category: What type of market it is
• Expiration Date: When the market closes

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Trading Information

• Current Prices: YES and NO prices
• Volume: Total trading activity
• Price History: Chart showing price movements over time
• Order Book: List of all pending buy/sell orders
• Recent Trades: Latest completed trades

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Your Information

• Your Holdings: Shares you currently own
• Your Orders: Your pending buy/sell orders
• Potential Profit/Loss: If you sold now

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Market Resolution

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How Markets Resolve

Markets resolve based on their specific resolution criteria:

1. Automated Resolution: Some markets resolve automatically using tracked data (e.g., stock prices, sports scores)
2. Admin Resolution: Admins determine the outcome based on the market’s criteria
3. Time-Based: Markets may resolve at expiration if no clear outcome

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Settlement Process

1. Market Closes: Trading stops
2. Outcome Determined: Winning side identified
3. Payout Calculation: System calculates winnings
4. Funds Distributed: Winners receive payouts automatically

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Understanding Payouts

• Winning Shares: Pay $1.00 per share
• Losing Shares: Worth $0.00
• Your Profit: (Number of winning shares × $1.00) - (What you paid)

Example:

• You bought 100 YES shares at $0.60 each =$60 total
• Market resolves YES
• You receive: 100 × $1.00 =$100
• Your profit: $100 -$60 = $40

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Reading Market Charts

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Price History Chart

The price history chart shows:

• YES Price Line: How YES price has changed over time
• NO Price Line: How NO price has changed over time
• Volume Bars: Trading activity at different times

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What to Look For

• Trends: Is the price moving up or down?
• Volatility: How much is the price swinging?
• Volume Spikes: When did most trading happen?
• Support/Resistance: Price levels that seem to hold

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Market Categories

Markets are organized into categories:

• Sports: Game outcomes, player performance
• Politics: Elections, policy decisions
• Finance: Stock prices, economic indicators
• Technology: Product launches, company news
• Entertainment: Awards, show outcomes
• And more: Any topic with a clear outcome

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Best Practices

1. Understand the Question: Make sure you know exactly what the market is asking
2. Check Resolution Criteria: Know how the outcome will be determined
3. Watch the Expiration: Markets close before events happen
4. Monitor Prices: Prices reflect new information quickly
5. Diversify: Don’t put all funds in one market

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Next Steps