Prediction Market Glossary

Definitions for terms you'll encounter while trading prediction markets — from CLOB and liquidity to market-resolution semantics. Each entry links to live markets that illustrate the concept.

limit-orderAn order to buy or sell at a specified price or better — sits in the order book …
gas-feeA gas fee is the transaction cost paid in MATIC for executing operations on the …
fade-the-publicFade the public is a contrarian strategy of betting against the crowd's heavily-…
tail-riskTail risk is the probability of large, low-probability outcomes in the extreme t…
categorical-marketA categorical market features multiple possible outcomes—such as five competing …
good-til-cancelledAn order that remains in the book until either filled or explicitly cancelled. U…
fill-or-killFill or kill (FOK) is an order that must execute fully and immediately at the cu…
implied-probabilityImplied probability is the market's consensus on the chance an event resolves YE…
narrativeNarrative trading means making investment decisions based on emerging news stori…
vigThe implicit fee in market prices when YES + NO exceed $1.00 — typically zero on…
kelly-fractionThe Kelly fraction is the percentage of your bankroll suggested by the Kelly cri…
edgeEdge is the difference between your personal probability assessment and the mark…
wisdom-of-the-crowdWisdom of the crowd is the principle that aggregating many independent forecasts…
geo-blockingGeo-blocking is a region-based restriction that prevents users in certain jurisd…
complementary-shareComplementary shares are paired YES and NO outcome shares on Polymarket whose pr…
expected-valueExpected value (EV) is the probability-weighted average outcome of a trade—calcu…
polygon-networkPolygon is an Ethereum Layer 2 sidechain that powers Polymarket's transaction se…
wash-tradingWash trading is buying and selling the same contract to artificially inflate vol…
open-ordersAn open order is a limit order that you've placed but hasn't been fully matched …
scalar-marketA scalar market resolves to a continuous numeric value within a specified range.…
risk-of-ruinRisk of ruin is the probability that a series of trades reduces your bankroll be…
redemption-feeA redemption fee is the cost charged when converting winning shares back into US…
wallet-connectionWallet connection is the process of authorizing a self-custodial crypto wallet (…
yes-shareA YES share is a contract that pays $1.00 if an event resolves YES, and $0.00 if…
market-makerA trader who provides liquidity by quoting both buy and sell prices simultaneous…
slippageSlippage is the difference between your expected trade price and the actual exec…
taker-feeA taker fee is a fee paid by traders that remove liquidity by hitting an existin…
epistemic-humilityEpistemic humility means recognizing the limits of one's knowledge — vital for s…
no-shareA NO share is a contract that pays $1 if the underlying event resolves NO; it's …
fundamentalsFundamentals are the underlying real-world drivers—economic data, polls, events—…
share-priceShare price is the cost of one YES or NO share in a prediction market, ranging f…
binary-outcomeA contract that resolves to one of exactly two outcomes — YES or NO. Traders use…
front-runFront-running is submitting a trade ahead of a known pending trade to capture th…
clobA matching engine that pairs buy and sell orders by price-time priority. Polymar…
fractional-kellyFractional Kelly is a scaled-down Kelly bet (e.g., half or quarter Kelly) that r…
order-book-depthOrder book depth is the total quantity of buy and sell orders at each price leve…
log-lossLog loss is an alternative to Brier score that penalizes confident-but-wrong pre…
prediction-marketA market where participants trade contracts that pay out based on the outcome of…
merge-sharesMerge shares is the process of combining one YES share and one NO share of the s…
metamaskA browser-extension and mobile crypto wallet that supports Polygon and the Polym…
smart-moneyCapital deployed by traders with superior information or skill—often inferred fr…
thin-marketA thin market is one with low liquidity, where even modest orders can substantia…
approve-tokenToken approval is the permission you grant to a smart contract to allow it to sp…
ev-positive-betAn EV-positive trade has expected value greater than zero—its probability-weight…
drawdownThe peak-to-trough decline in your account value over a specified period. On Pol…
liquidityLiquidity measures how easily you can buy or sell market shares without causing …
builder-attributionBuilder attribution is an on-chain identifier crediting third-party interfaces f…
oracleAn external data feed that determines whether a market resolves YES or NO. Polym…
polling-aggregateAn average of multiple opinion polls — used to inform political prediction marke…
take-profitAn automated SELL order that triggers once a position's value reaches a specifie…
redeemRedeem is the process of converting winning shares into USDC after a market reso…
fillsFills are executed trades—partial or complete matches against an order. When you…
split-sharesSplit shares is converting $1 USDC into 1 YES and 1 NO share. This core predicti…
yes-no-tradingBinary contracts that resolve YES (1) or NO (0) at the underlying event's outcom…
maker-feeA maker fee is a fee or rebate paid to traders who provide liquidity by posting …
stop-lossAn automated SELL order that triggers if a position's value falls below a chosen…
self-custodySelf-custody means holding crypto assets directly in a wallet you control, with …
settlementSettlement is the distribution of payouts after a prediction market resolves. Wi…
arbitrageA risk-free profit by exploiting price differences between equivalent contracts …
brier-scoreThe Brier score measures the accuracy of probabilistic forecasts, with lower sco…
smart-orderA smart order is a server-side automated instruction that executes your trading …
deep-marketA high-liquidity market where large orders can fill near the mid price without s…
resolutionMarket resolution is the process of finalizing a market's outcome based on a rea…
kelly-criterionA formula for optimal position sizing based on edge and odds. It tells traders w…
conditional-orderA conditional order is a pending trade instruction that automatically executes o…
usdcUSDC is a USD-pegged stablecoin used as the trading currency on Polymarket. Back…
spreadThe difference between the highest buy price (bid) and the lowest sell price (as…
kycKnow Your Customer (KYC) is an identity-verification process required by platfor…
polymarketPolymarket is a decentralized prediction market platform on Polygon where users …
base-rateThe base rate is the observed frequency of an outcome in historical data. On Pol…
calibrationCalibration measures how closely a forecaster's stated probabilities match real-…
frequency-vs-probabilityFrequency measures how often something has occurred in the past; probability pre…
sharp-moneySharp money is betting activity from experienced, profitable traders. These bets…
cftcThe U.S. Commodity Futures Trading Commission is the regulator that classifies p…
market-orderA market order executes immediately at the best available price on the order boo…
bankrollThe total capital a trader has allocated to prediction-market trading. It's mone…
categorical-overroundCategorical overround occurs when the sum of implied probabilities across all ou…
dollar-cost-averagingDollar-cost averaging (DCA) is a strategy of buying fixed-dollar amounts at regu…
trading-feeA trading fee is a percentage charge applied to each buy or sell order, paid to …
amlAnti-money-laundering (AML) refers to regulations designed to detect and prevent…