Learn how prediction markets work, why they're accurate, and how you can use them to bet on news events.
A prediction market is like a stock market, but instead of buying shares in companies, you're buying shares in the outcome of future events. Think of it as "betting with a purpose" - you're not just gambling, you're contributing to a collective intelligence system that predicts the future.
If there's a 70% chance it will rain tomorrow, you can buy "Yes" shares for 70¢ each. If it rains, your shares are worth $1. If it doesn't rain, they're worth $0. The price reflects the market's collective belief about the probability.
Prices range from $0 to $1 (or 0¢ to 100¢). A price of 65¢ means the market thinks there's a 65% chance the event will happen.
When many people trade based on their knowledge and research, the market price becomes a very accurate prediction.
Prediction markets consistently outperform polls, experts, and other forecasting methods. Here's why:
People put real money on the line, so they're motivated to research and think carefully about their predictions.
Markets combine information from thousands of participants, each bringing their own knowledge and perspective.
If the market price is wrong, smart traders can profit by correcting it, which automatically improves accuracy.
"Will Joe Biden win the 2024 election?" - Traders buy and sell based on polls, news, campaign performance, and insider knowledge.
"Will the Fed raise interest rates in March?" - Financial professionals and economists trade based on economic data and Fed communications.
"Will Taylor Swift announce a new album this year?" - Fans and industry insiders trade based on social media clues and industry knowledge.
Ready to try prediction markets? Here's what you need to know to get started safely and successfully.
Begin with small amounts while you learn. Even $5-10 trades can be educational and fun.
Get $10 BonusRead our other guides to understand odds, trading strategies, and responsible wagering.
More GuidesLearn how to read market prices and understand implied probability.
Read NextBest practices for safe and responsible prediction market trading.
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