General information, not financial, investment, legal, tax or betting advice · Prediction markets carry risk of loss · 18+ or the legal age in your region
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Prediction market strategy basics

An education pillar on prediction market strategy basics: reading a price as a probability, calibration over conviction, resolution rules, costs, position sizing, and managing a position. Information, not advice.

Last reviewed 23 June 2026 · Educational, not advice

The one idea that matters

A price is a probability.

A contract that settles to one dollar if an event happens trades between 1 and 99 cents. That price is the market's estimate of the chance. Drag the slider to see the implied probability and what a 100 dollar stake would return if it resolves yes. It is an estimate, not a forecast, and not advice.

Price
50ยข
Implied chance
50%
Stake $100 if YES returns $200 · if NO you lose your stake.

Illustrative; excludes fees and spread, which reduce real returns.

FAQ

Common questions.

What is edge in a prediction market?

Edge is the gap between the market price and your own honest estimate of the probability, after costs. If a contract trades at forty cents and you genuinely believe the chance is fifty percent, you think there is an edge, but only if that gap survives fees and the spread. Edge is a belief about mispricing, not a guarantee, and you can be wrong. This is general information, not advice.

Is conviction the same as edge?

No. Feeling sure about an outcome is not the same as having an accurate probability that differs from the market. Calibration, meaning how well your stated probabilities match real frequencies over many forecasts, matters far more than how confident any single view feels.

How should I size a position?

Decide your maximum loss before you trade, keep any single position small relative to the money you can afford to lose, and never increase size to recover a loss. There is no position size that makes a losing view a winning one, so discipline around sizing is about surviving variance, not chasing returns.

Do fees really matter that much?

Yes. Fees, the spread between buying and selling, and thin liquidity quietly erode returns and can erase an apparent edge entirely, especially with frequent trading. Always estimate the all in cost of a trade before you place it.

Can I just hold every contract to settlement?

You can, but the ability to sell back into the market before resolution is a risk tool. It lets you cut a loss or lock in a gain when new information arrives. Treat early exit as part of managing a position rather than as a reason to trade more often.