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Home/Glossary

REFERENCE

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.

An order to buy or sell at a specified price or better — sits in the order book …

A gas fee is the transaction cost paid in MATIC for executing operations on the …

fade-the-public

Fade the public is a contrarian strategy of betting against the crowd's heavily-…

Tail risk is the probability of large, low-probability outcomes in the extreme t…

categorical-market

A categorical market features multiple possible outcomes—such as five competing …

good-til-cancelled

An order that remains in the book until either filled or explicitly cancelled. U…

Fill or kill (FOK) is an order that must execute fully and immediately at the cu…

implied-probability

Implied probability is the market's consensus on the chance an event resolves YE…

Narrative trading means making investment decisions based on emerging news stori…

The implicit fee in market prices when YES + NO exceed $1.00 — typically zero on…

The Kelly fraction is the percentage of your bankroll suggested by the Kelly cri…

Edge is the difference between your personal probability assessment and the mark…

wisdom-of-the-crowd

Wisdom of the crowd is the principle that aggregating many independent forecasts…

Geo-blocking is a region-based restriction that prevents users in certain jurisd…

complementary-share

Complementary shares are paired YES and NO outcome shares on Polymarket whose pr…

Expected value (EV) is the probability-weighted average outcome of a trade—calcu…

polygon-network

Polygon is an Ethereum Layer 2 sidechain that powers Polymarket's transaction se…

Wash trading is buying and selling the same contract to artificially inflate vol…

An open order is a limit order that you've placed but hasn't been fully matched …

A scalar market resolves to a continuous numeric value within a specified range.…

Risk of ruin is the probability that a series of trades reduces your bankroll be…

A redemption fee is the cost charged when converting winning shares back into US…

wallet-connection

Wallet connection is the process of authorizing a self-custodial crypto wallet (…

A YES share is a contract that pays $1.00 if an event resolves YES, and $0.00 if…

A trader who provides liquidity by quoting both buy and sell prices simultaneous…

Slippage is the difference between your expected trade price and the actual exec…

A taker fee is a fee paid by traders that remove liquidity by hitting an existin…

epistemic-humility

Epistemic humility means recognizing the limits of one's knowledge — vital for s…

A NO share is a contract that pays $1 if the underlying event resolves NO; it's …

Fundamentals are the underlying real-world drivers—economic data, polls, events—…

Share price is the cost of one YES or NO share in a prediction market, ranging f…

A contract that resolves to one of exactly two outcomes — YES or NO. Traders use…

Front-running is submitting a trade ahead of a known pending trade to capture th…

A matching engine that pairs buy and sell orders by price-time priority. Polymar…

fractional-kelly

Fractional Kelly is a scaled-down Kelly bet (e.g., half or quarter Kelly) that r…

order-book-depth

Order book depth is the total quantity of buy and sell orders at each price leve…

Log loss is an alternative to Brier score that penalizes confident-but-wrong pre…

prediction-market

A market where participants trade contracts that pay out based on the outcome of…

Merge shares is the process of combining one YES share and one NO share of the s…

A browser-extension and mobile crypto wallet that supports Polygon and the Polym…

Capital deployed by traders with superior information or skill—often inferred fr…

A thin market is one with low liquidity, where even modest orders can substantia…

Token approval is the permission you grant to a smart contract to allow it to sp…

ev-positive-bet

An EV-positive trade has expected value greater than zero—its probability-weight…

The peak-to-trough decline in your account value over a specified period. On Pol…

Liquidity measures how easily you can buy or sell market shares without causing …

builder-attribution

Builder attribution is an on-chain identifier crediting third-party interfaces f…

An external data feed that determines whether a market resolves YES or NO. Polym…

polling-aggregate

An average of multiple opinion polls — used to inform political prediction marke…

An automated SELL order that triggers once a position's value reaches a specifie…

Redeem is the process of converting winning shares into USDC after a market reso…

Fills are executed trades—partial or complete matches against an order. When you…

Split shares is converting $1 USDC into 1 YES and 1 NO share. This core predicti…

Binary contracts that resolve YES (1) or NO (0) at the underlying event's outcom…

A maker fee is a fee or rebate paid to traders who provide liquidity by posting …

An automated SELL order that triggers if a position's value falls below a chosen…

Self-custody means holding crypto assets directly in a wallet you control, with …

Settlement is the distribution of payouts after a prediction market resolves. Wi…

A risk-free profit by exploiting price differences between equivalent contracts …

The Brier score measures the accuracy of probabilistic forecasts, with lower sco…

A smart order is a server-side automated instruction that executes your trading …

A high-liquidity market where large orders can fill near the mid price without s…

Market resolution is the process of finalizing a market's outcome based on a rea…

kelly-criterion

A formula for optimal position sizing based on edge and odds. It tells traders w…

conditional-order

A conditional order is a pending trade instruction that automatically executes o…

USDC is a USD-pegged stablecoin used as the trading currency on Polymarket. Back…

The difference between the highest buy price (bid) and the lowest sell price (as…

Know Your Customer (KYC) is an identity-verification process required by platfor…

Polymarket is a decentralized prediction market platform on Polygon where users …

The base rate is the observed frequency of an outcome in historical data. On Pol…

Calibration measures how closely a forecaster's stated probabilities match real-…

frequency-vs-probability

Frequency measures how often something has occurred in the past; probability pre…

Sharp money is betting activity from experienced, profitable traders. These bets…

The U.S. Commodity Futures Trading Commission is the regulator that classifies p…

A market order executes immediately at the best available price on the order boo…

The total capital a trader has allocated to prediction-market trading. It's mone…

categorical-overround

Categorical overround occurs when the sum of implied probabilities across all ou…

dollar-cost-averaging

Dollar-cost averaging (DCA) is a strategy of buying fixed-dollar amounts at regu…

A trading fee is a percentage charge applied to each buy or sell order, paid to …

Anti-money-laundering (AML) refers to regulations designed to detect and prevent…

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