Breakeven is the price or probability at which a position produces neither a profit nor a loss once costs are included, the line you have to clear just to get back what you put in.
Last reviewed 12 December 2025 · Educational, not advice
Breakeven is the point at which a trade comes out flat, no gain and no loss, after you account for what it cost you. In a prediction market a contract that pays one dollar if an event happens and nothing if it does not is priced somewhere between one and ninety nine cents. The price you pay is, in effect, your breakeven probability. Buy a yes contract at forty cents and, over many similar trades, you would roughly break even if the event truly happens about forty percent of the time. Above that rate you would expect to come out ahead, below it behind.
That clean version ignores costs, and costs always move the line against you. If you pay a fee on top of the price, or cross a spread to get filled, the outcome has to be a little more likely than the headline price implies before you actually break even. A contract that looks like a forty percent breakeven might really need forty two or forty three percent once the round trip costs are counted. The useful habit is to treat the screen price as a floor on your breakeven and to add your costs on top, because the true bar is always a touch higher than it first appears.
There is also a breakeven on the way out, if you plan to sell before the market resolves rather than hold to settlement. In that case you break even when you can sell at the same price you paid. Because the spread means you usually buy at the ask and sell at the bid, selling straight after buying tends to lock in a small loss even if nothing has moved. Knowing your exit breakeven, not just your entry one, keeps you honest about what a position needs to do before it is genuinely in profit.
Breakeven matters because it turns a price into a question you can actually answer. Once you know the breakeven probability after costs, you can compare it to your own honest estimate of the odds. If you think the real chance is clearly higher than your breakeven, the trade has a positive expected value on your view, though it can still lose on any single outcome. Breakeven is a cost line, not a prediction. It tells you what you need just to avoid a loss, and we never present any price as a forecast of the result.
You buy 100 yes contracts at 40 cents, so the position costs 40 dollars, and each pays one dollar if it resolves yes. Your breakeven probability is about 40 percent before fees. Add a small fee and a spread, and the event really needs to be a little more likely than 40 percent for you to come out even. If you instead tried to sell straight away at the 38 cent bid, you would take a loss even though the market had not moved.
Illustrative only. Numbers are examples, not a quote or a prediction, and exclude exact fees.
Knowing your breakeven does not make a trade win. The event can still resolve against you, and a position above breakeven on paper can still lose. Prediction markets can lose you money. Stake only what you can afford to lose, never to chase a loss, and never on borrowed money. If it stops feeling like a free choice, step back. In the United States you can call or text the helpline on 1-800-GAMBLER or visit ncpgambling.org.
Breakeven is the point at which a position produces neither a profit nor a loss once costs are included. For a contract bought at a given price, it is the outcome or probability at which you simply get back what you paid.
Roughly, yes, before costs. A contract bought at 40 cents that pays one dollar if it resolves yes breaks even over many similar trades if the real chance of yes is about 40 percent. Fees and the spread push the true breakeven a little higher.
Every cost raises the bar. If you pay a fee on top of the price, the outcome has to be a bit more likely than the headline price suggests for you to come out even. The breakeven after costs is always worse than the price on the screen.
No. Breakeven is a cost line, not a forecast. It tells you what you need just to avoid a loss, not what will happen. Comparing it to your own estimate of the odds is a discipline, not a guarantee, and you can still lose.
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