If you’ve never used a prediction market before, the prices look weird. “Yes” trades at $0.62. “No” trades at $0.38. They sum to a dollar. The whole thing reads more like a stock exchange than a sportsbook — because that’s essentially what it is. Here’s how to read these markets correctly, and what each price actually means.
The core concept: prices are probabilities
In a prediction market, the price of a “Yes” share equals the market’s collective estimate of the probability that the event will happen. Multiply by 100 and you have a percentage.
- $0.62 Yes = 62% probability
- $0.38 No = 38% probability
- Sum: $1.00 = 100% (since the event will either happen or not)
If you buy a share at $0.62 and the event happens, that share pays $1. Your profit: $0.38. If the event doesn’t happen, the share is worth $0. Your loss: $0.62.
Why this is more honest than sportsbook odds
Sportsbook odds bake in a margin (the “vig” or “juice”) so the bookmaker profits regardless of outcome. American odds of -110/-110 imply each side has about a 52.4% probability — which sums to 104.8%. That extra 4.8% is the bookmaker’s cut.
Prediction markets don’t work that way. There’s no house. Yes and No prices sum to (very close to) $1.00, and the platform takes a separate trading fee that’s usually much smaller than sportsbook vig. The probabilities you see are the actual market consensus, not adjusted to favor a counterparty.
Reading the order book
Beyond the current price, each market shows an order book — the limit orders waiting to be matched. This is where you can see market depth.
| Side | Price | Size (shares) |
|---|---|---|
| Yes (buy) | $0.61 | 2,500 |
| Yes (buy) | $0.60 | 5,000 |
| Yes (buy) | $0.59 | 10,000 |
| — | — | — |
| No (sell) | $0.63 | 2,000 |
| No (sell) | $0.64 | 4,500 |
| No (sell) | $0.65 | 9,000 |
What this tells you:
- Best bid: Someone is willing to buy Yes at $0.61 (so equivalently, someone is willing to sell No at $0.39)
- Best ask: Someone is willing to sell Yes at $0.63 (so equivalently, someone is willing to buy No at $0.37)
- Spread: $0.02 between bid and ask — the cost of immediate execution
- Depth: 2,500 shares available at $0.61 — if you want more than that at this price, you’ll move the market
Market vs. limit orders
You have two ways to enter a position:
Market order: Buys at the best available price right now. Fast, but you pay the spread (and Polymarket’s taker fee). Good for small trades or when you need to act before news moves the price.
Limit order: You specify the price you’re willing to pay. Order sits on the book until someone matches it. Zero taker fee, may earn maker rebates, but no guarantee of execution if the price moves away. Good for non-urgent positions where you can wait.
For more on the cost difference, see our Polymarket fees guide.
Prices change as new information arrives
This is the most important thing to understand about prediction markets and why they’re often more accurate than polls. Prices move continuously as traders react to news.
If “Candidate X wins election” is trading at $0.55 in the morning and a major scandal breaks at noon, you’ll see the price drop in real time as traders sell Yes shares and buy No shares. By 2pm the same market might be at $0.32. The market price always reflects the latest available information.
For experienced traders, this is the opportunity. If you can identify when prices haven’t yet caught up to news — or when the crowd is mispricing something you know better than they do — you can buy below fair value and profit.
Reading multi-outcome markets
Some markets have more than two outcomes — for example, “Which party wins the 2028 election?” might list Democrat, Republican, Independent, and “Other.” In these markets, each outcome trades as its own Yes/No contract, and the implied probabilities of all outcomes should sum to roughly $1.00.
| Outcome | Yes price | Implied probability |
|---|---|---|
| Democrat wins | $0.48 | 48% |
| Republican wins | $0.49 | 49% |
| Independent wins | $0.02 | 2% |
| Other | $0.01 | 1% |
| Total | $1.00 | 100% |
If the sum is meaningfully above or below $1.00, there’s an arbitrage opportunity for sophisticated traders. In practice, market makers keep these spreads tight.
What to do with this knowledge
Once you can read prediction market prices, you have a powerful tool. You’re looking at the crowd’s best estimate of probability — often more accurate than expert polls, pundit predictions, or your own gut feeling.
If you want to actually trade:
- Start with markets you understand well. Sports if you follow sports, politics if you follow politics, etc.
- Look for prices that seem mispriced relative to your honest assessment
- Use limit orders when you’re not in a rush
- Don’t risk money you can’t afford to lose
If you want to just use prediction markets as a forecasting tool — without trading — that works too. Sites like Polymarket and Manifold are free to read, and the prices are useful even if you never place a bet.