Market fundamentals

What is a prediction market?

A market for contracts tied to defined outcomes. Its prices can express expectations, while its rules determine what eventually gets paid.

Independent research. We receive no commission from the official links on this page. Our disclosures →

One question, a tradable claim

A prediction market lets participants buy and sell claims on an event. A standard binary example pays $1 for a winning outcome and zero for a losing one. The actual contract rules define the outcome and can specify alternative settlement. It is the claim, not merely a headline about the event, that is traded.

Standard binary contract: pay stake and fees, then win gross payoff or lose outlay.
Original educational diagram. Examples are illustrative, not live data.
Source provenance and retrieval dates

One question, a tradable claim

Polymarket US product identity ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket US settlement ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket international resolution ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Published source scope only. Numerical examples labelled hypothetical are our calculations; private-account performance is not established.

A winning and losing calculation

Twenty contracts bought at 35¢ cost $7 before fees. If each settles at $1, gross payment is $20 and profit before fees $13. If they settle at zero, the stake loss is $7 plus fees. Selling early instead produces proceeds at the actual exit price, minus applicable charges.

A 35¢ price on a $1 contract translates to 35% implied probability before costs. It does not independently measure the event’s true chance or tell you that the position is suitable.

Source provenance and retrieval dates

A winning and losing calculation

Polymarket US product identity ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket US settlement ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket international resolution ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Published source scope only. Numerical examples labelled hypothetical are our calculations; private-account performance is not established.

Why prices and forecasts can disagree

A last trade, midpoint, best bid and executable ask are different measurements. The last trade can be old; the best quote can cover only a small quantity. Trading costs, risk preferences, capital constraints and liquidity all affect the price.

Two venues can also define “the same” event differently: observation windows, data revisions, deadlines and resolution sources can change the result. A price gap between unequal claims is not evidence of a riskless opportunity.

Source provenance and retrieval dates

Why prices and forecasts can disagree

Polymarket US product identity ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket US settlement ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket international resolution ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Published source scope only. Numerical examples labelled hypothetical are our calculations; private-account performance is not established.

What to read next

Start with the contract mechanics guide, then the fee guide, then a product comparison. In the US, keep Polymarket US separate from its international crypto-based namesake. Funding availability, identity checks and market-specific restrictions are separate questions.

This publication explains mechanics and comparisons; it does not submit orders, hold funds, connect wallets or provide personalised recommendations. Losing contracts can pay nothing. Use the calculator to understand the arithmetic before drawing conclusions from a percentage.

Source provenance and retrieval dates

What to read next

Polymarket US product identity ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket US settlement ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket international resolution ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Published source scope only. Numerical examples labelled hypothetical are our calculations; private-account performance is not established.

One full claim, two cash outcomes

A hypothetical contract asks whether an official release is strictly above a named threshold. Buying ten Yes contracts at 60¢ costs $6 before fees. A Yes settlement returns $10 gross, or $4 before fees. A No settlement returns $0 and loses $6 plus fees. A release exactly equal to a strictly-above threshold does not satisfy that question.

MomentCash effect
Buy 10 at 60¢−$6, plus entry costs
Yes resolves+$10 gross; +$4 net before costs
No resolves$0 returned; −$6 net before costs
Source provenance and retrieval dates

One full claim, two cash outcomes

Polymarket US settlement ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Polymarket US product identity ↗
Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Published source scope only. Numerical examples labelled hypothetical are our calculations; private-account performance is not established.

Sources

  1. Polymarket US settlement →Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified
  2. Polymarket international resolution →Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified
  3. Polymarket US product identity →Last successful source check: 2026-10-24Evidence origin: direct public-document read · Current evidence status: verified

Your next useful step

Use a known price; the calculation does not supply current odds.

Translate a quote into implied probability →

Keep researching

Beginner guide

How Kalshi works: from a contract price to settlement

A contract has a price today and a defined payoff later. Understand the question, your total outlay and the loss scenario before interpreting its implied probability.

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Beginner guide

How Polymarket works: US and international explained

The two products share a brand but differ in account structure, funding, fees and access. Here is how to read each without mixing them together.

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Platform comparison

Compare prediction markets by product, rules and cost

Kalshi, Polymarket US and Novig offer different contracts and fee structures. Start with the question you want answered, then compare equivalent products.

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