Prediction market glossary

Market basics

Prediction market

An exchange where people trade contracts on whether a future event will happen.

Event contract

The tradeable instrument itself, tied to a specific, verifiable outcome.

Yes contract

Pays 100 if the event happens and 0 if it does not.

No contract

The mirror image: pays 100 if the event does not happen.

Implied probability

The price read as a percentage — a contract at 62 implies about a 62% chance.

Resolution

The moment the outcome is determined and the market is decided.

Resolution source

The agreed authority used to decide the outcome, named in the market rules.

Settlement

Paying out contracts at 100 or 0 after resolution.

Market rules

The fine print defining exactly what counts as the event happening. Read it before trading.

Expiry

The date and time a market stops trading.

Trading mechanics

Order book

The live list of buy and sell orders waiting to be matched.

Bid

The highest price someone is currently willing to pay.

Ask

The lowest price someone is currently willing to sell at.

Spread

The gap between bid and ask. A wide spread makes entering and exiting expensive.

Market order

Buy or sell immediately at whatever price is available.

Limit order

An order that only fills at your chosen price or better.

Liquidity

How much can be traded without moving the price much.

Slippage

The difference between the price you expected and the price you got.

Fill

An order being matched, fully or partly.

Position

The contracts you currently hold in a market.

Exposure

How much money is at risk if you are wrong.

Exit early

Selling before resolution to lock in a profit or cut a loss.

Mark price

The current valuation used to show your unrealised profit or loss.

Risk and strategy

Position sizing

Deciding how much to risk per trade. Most beginners risk 1-2% of their balance.

Edge

A reason to believe the market price is wrong that you can state in one sentence.

Expected value

The average outcome of a trade if you repeated it many times.

Variance

The swings around that average. Being right on average still means losing streaks.

Drawdown

The fall from your peak balance to a later low point.

Hedge

A second position that reduces losses if the first goes wrong.

Arbitrage

Exploiting the same event trading at different prices in two places.

Favourite-longshot bias

The tendency for very unlikely outcomes to be priced higher than they deserve.

Overtrading

Taking positions out of boredom rather than conviction. The most common way accounts bleed out.

Trading journal

A written record of why you entered and exited. The fastest way to separate process from luck.

Money and fees

Trading fee

What the platform charges to enter or exit a position.

Rakeback

A share of your trading fees returned to you. Code PAISA returns 3.5% on Moon.com, for life.

Referral code

A code attached at signup that sets benefits like rakeback. It cannot be added later.

Stablecoin

A crypto token designed to track a currency, usually the US dollar. USDT and USDC are the common ones.

Network fee

The cost of moving crypto between wallets, set by the blockchain, not the platform.

Network

The specific blockchain a transfer travels on. Sending on the wrong one usually loses the funds.

Deposit address

The destination string for your transfer. Always test with a small amount first.

Test transfer

A small first send to confirm the address and network are correct.

Withdrawal

Moving funds off the platform back to your own wallet or exchange.

KYC

Identity verification required by regulated exchanges before you can fund an account.

TDS

Tax deducted at source — in India, 1% applies on crypto transfers at the exchange stage.

Disposal

Any conversion of crypto, each one a reportable event for tax purposes in Canada and elsewhere.

Definitions are written for beginners and simplified on purpose. Exact meanings can differ between platforms — the market rules on the platform you trade always take precedence. Nothing here is financial advice.

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