A prediction market is a marketplace for contracts tied to future events. Depending on the platform, a contract may pay a fixed amount if an event occurs and nothing if it does not, so its trading price can be interpreted as a market-implied view of the outcome's probability.
Prices reflect available orders, participant beliefs, liquidity and market rules rather than guaranteed truth. Short-duration markets can move quickly, and automated strategies must account for timing, bid-ask spreads, market depth, fees and the exact settlement criteria.
Acronyms and aliases
event market synonymforecasting market synonym
Related terms
Frequently asked questions
How does a prediction market price relate to probability?
For a fixed-payout event contract, the price is often read as an implied probability, although liquidity and trading frictions can distort it.
Are prediction market prices guaranteed forecasts?
No. Prices aggregate market activity, but they can be affected by limited information, thin liquidity, incentives and changing conditions.
