1. What is a prediction market?
A prediction market is a marketplace where people trade contracts based on the outcome of future events (elections, sports, economic data, tech launches, etc.).
Prices reflect the market’s collective belief about how likely an event is to happen.
2. What does a contract represent?
Most contracts resolve to:
$1 if the event happens
$0 if it does not
If a contract trades at $0.65, the market is implying about a 65% probability that the event will occur.
3. How do I make money?
You make money by:
Buying underpriced probabilities (you think the chance is higher than the market price)
Selling overpriced probabilities (you think the chance is lower)
Profit comes from being more accurate than the crowd, not from guessing outcomes.
4. Is this gambling?
Not exactly.
Gambling: fixed odds, no exit, house edge
Prediction markets: dynamic pricing, ability to trade out, information-driven
That said, bad trading feels exactly like gambling, especially without a strategy.
5. Do I have to wait until the event ends to profit?
No.
You can:
Buy at 40¢ → sell later at 70¢
Sell at 80¢ → buy back at 50¢
Most experienced traders do not hold to resolution.
6. What skills matter most?
Top skills include:
Probabilistic thinking
Information evaluation (news vs noise)
Emotional control
Position sizing
Knowing when not to trade
Being early and disciplined often matters more than being brilliant.
7. What are the biggest beginner mistakes?
Common pitfalls:
Going all-in on one trade
Confusing confidence with probability
Trading on headlines without context
Ignoring liquidity and fees
Refusing to exit a losing position
Survival matters more than early profits.
8. How much money should I start with?
Start with an amount you can:
Lose entirely
Learn with emotionally
Trade multiple times without fear
Many pros recommend starting small and scaling slowly.
9. What does “liquidity” mean and why does it matter?
Liquidity is how easily you can enter or exit a trade without moving the price.
Low liquidity means:
Worse prices
Harder exits
Higher risk
New traders should prefer high-volume markets.
10. Should I trade many markets or specialize?
Specialize early.
Traders who focus on:
One domain (politics, crypto, sports, macro)
One market type
tend to outperform generalists.
11. Can the market be wrong?
Yes often.
Markets are best at:
Aggregating known information
They struggle with:
Hidden info
Sudden shocks
Legal or technical nuances
Complex resolution rules
Your edge often comes from understanding what the market is missing.
12. What is the difference between “Yes” and “No” shares?
Yes pays $1 if the event happens
No pays $1 if it does not
Buying “No” is equivalent to betting the probability is lower than the current price.
13. How do I manage risk?
Basic rules:
Never risk more than a small % per trade
Avoid correlated bets
Cut losses early
Don’t trade when emotional or tired
Prediction markets reward patience more than activity.
14. Are insiders or whales unbeatable?
No.
Large traders:
Move prices
Can be wrong
Often signal information unintentionally
Small traders can win by being:
Faster
More specialized
More disciplined
15. What should I track as a beginner?
Keep a simple journal:
Market
Entry price
Exit price
Reason for trade
What you learned
Learning speed beats profit early on.
16. What’s a good beginner mindset?
Think like:
“I am buying and selling probabilities, not predicting the future.”
Your goal is not to be right—
Your goal is to be less wrong than the market.
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