Prediction Market Glossary: Terms Explained Simply

Prediction markets come with their own vocabulary, borrowed from stock trading, sports betting and crypto. This glossary explains the terms you’ll meet on Polymarket, Kalshi and similar platforms in plain English. For Kalshi’s app-specific terms, see our Kalshi glossary.

Markets and prices

Term	What it means
Prediction market	An exchange where people trade on the outcome of future events. Prices move as traders buy and sell.
Event contract	The US regulatory name for a yes/no contract on an event. Kalshi calls them contracts; Polymarket calls them shares.
Binary market	A market with two outcomes, Yes and No.
Multi-outcome event	A question with several possible answers, such as an election with many candidates. Each answer is its own yes/no market.
Implied probability	The chance a price represents. 35¢ implies about 35%.
Ladder	A set of markets on the same question at different levels, such as Bitcoin above $100k, $110k and $120k.
Touch vs close	“Hit” or “touch” markets pay if a price is reached at any time; “above on a date” markets look only at one moment.
Combo or parlay	One contract that pays only if several outcomes all happen.
Long shot	An outcome priced very low, such as 2¢. Cheap, but it rarely pays.

Trading

Term	What it means
Order book	The list of buy (bid) and sell (ask) orders waiting at each price.
Bid / ask	The best price someone will pay (bid) and the best price someone will sell at (ask).
Spread	The gap between the best bid and ask. A wide spread is a hidden cost of trading.
Market order	Buy or sell now at the best available prices.
Limit order	Buy or sell only at your price or better. It may wait on the book or never fill.
Maker / taker	A maker’s order rests on the book; a taker’s order fills immediately against it. Takers usually pay the fee.
Slippage	Paying a worse average price than you expected because your order ate through several price levels.
Liquidity	How easily you can trade without moving the price. Deep markets have lots of orders near the current price.
Volume	How much has traded, in dollars or contracts.
Open interest	How many contracts are still held and not yet settled.
Position	The shares you currently hold in a market.
Cash out / sell early	Selling your shares before the market settles, at whatever price buyers will pay.
Arbitrage	Buying and selling the same outcome on two venues to lock in a price difference. Watch for rule differences; see our price-gap scanner.

Settlement

Term	What it means
Resolution / settlement	When the outcome is decided and winning shares pay $1.
Resolution source	The official data or authority a market uses to decide the outcome, such as a government agency or a league.
Rules	The exact wording that decides what counts as Yes. Always more important than the market’s title.
Oracle	On crypto-based markets, the system that reports the real-world outcome to the smart contract. Polymarket uses UMA’s oracle.
Dispute	A challenge to a proposed resolution, settled by the platform’s process.
Early resolution	Settling before the scheduled date, for example once media organisations call an election.
50-50 resolution	Paying 50¢ on each side when an outcome is cancelled or a draw, if the rules say so.

Money and regulation

Term	What it means
CFTC	The Commodity Futures Trading Commission, the US federal regulator for event contracts.
DCM	Designated contract market: a CFTC-licensed exchange, such as Kalshi or Polymarket US.
Stablecoin	A crypto token pegged to a currency, such as USDC. Polymarket’s main exchange uses pUSD, backed one-to-one by USDC.
KYC	“Know your customer” identity checks that regulated platforms run before you can trade.
Close-only	A status in some countries where you can close existing positions but not open new ones.

FAQ

What does “Yes 62¢” mean?

A Yes share costs 62¢ and pays $1 if the outcome happens, so the market puts the chance at about 62%. A No share costs about 38¢.

Is a prediction market the same as betting?

The mechanics are similar, but you trade against other users on an exchange rather than against a bookmaker, and you can sell before the outcome. See What are prediction markets?