Prediction Market Glossary
Prediction markets come with their own vocabulary. This glossary defines the terms that appear across MarketSignals in plain, neutral language, so the figures and write-ups on the rest of the site are easier to read. These are descriptions of how the mechanics work, not guidance of any kind.
- Prediction market
- A marketplace where participants trade contracts tied to the outcome of a future event. The trading price of a contract reflects how the crowd currently weighs the possible outcomes.
- YES share / NO share
- The two sides of a binary market. A YES share pays out if the event happens, and a NO share pays out if it does not. Their prices typically move in opposite directions and together frame the market's view of the event.
- Resolution
- The process of deciding the actual outcome of a market once the event has occurred. After resolution, winning shares are worth their full value and losing shares are worth nothing.
- Resolution source
- The reference, named when a market is created, used to determine the outcome. It might be an official result, a reputable news report, or another agreed authority, and it defines exactly how the question will be settled.
- Liquidity
- A measure of how easily shares can be traded without moving the price much. Deeper liquidity generally means tighter pricing and smaller gaps between the best available prices on each side.
- Notional volume
- The total value of trading activity in a market or by a wallet, expressed in the platform's unit of account. It describes how much has changed hands, not whether any of it was profitable.
- Implied probability
- The likelihood of an outcome as suggested by its current price. In a binary market, a YES price of 70 cents implies roughly a 70 percent chance the crowd assigns to YES, before fees and other frictions.
- Market maker
- A participant or automated system that stands ready to trade on both sides of a market, helping to keep prices continuous and shares available. Market makers add liquidity rather than expressing a single directional view.
- Order book
- The list of outstanding offers to trade at various prices on each side of a market. It shows the prices currently available and how much size sits behind each level.
- Spread
- The gap between the best available price to enter on one side and the best price on the other. A narrow spread usually points to an active, liquid market.
- Settlement
- The final step after resolution in which positions are paid out according to the determined outcome. Once a market settles, its shares no longer trade.
- Position
- The set of shares a wallet currently holds in a market. A position reflects exposure to an outcome and is visible in public data while it remains open.
- Realized profit and loss
- The gain or loss a wallet has locked in from positions it has already closed or that have settled, as opposed to paper figures on positions still open.
- Tail
- The far ends of a market's price range, near zero or near the maximum. A price deep in a tail indicates the crowd currently views one outcome as far more likely than the other.
- Snapshot
- A point-in-time capture of public market and wallet data. MarketSignals renders from periodic snapshots, so figures shown reflect the moment of capture rather than the live platform.