Prediction Market Terms Explained: The Complete Glossary
Last updated: August 28, 2026
Prediction markets (mostly) run on the same handful of concepts: shares/contracts, order books, bids and asks, resolution. This glossary defines them all in one place, grouped by what they're for, with links to a full explainer for more advanced topics.
Market Basics
| Term | Definition |
|---|---|
| Prediction market | A venue for trading shares whose value is tied to the outcome of a future event. Share prices reflect the crowd's estimate of how likely that outcome is. |
| Share (or contract) | The tradable unit in a prediction market. A YES share pays $1 if the event happens and $0 if it doesn't. A NO share pays the reverse. |
| YES / NO | The two sides of a binary market. These are tradable shares you can buy or sell at any point before resolution, not just hold to the end. You may see variations like UP / DOWN. |
| Binary market | A market with exactly two outcomes, YES and NO. Multi-outcome markets are made up of many of them. |
| Multi-outcome market | A market with more than two possible results, structured as a group of binary YES/NO markets where only one outcome resolves to YES. See What Is a Multi-Outcome Market? |
| Bond market | A market on a near-certain outcome, where the unlikely side's shares trade at $0.98–$0.99, offering a small, predictable return until expiry. See What Are Bond Markets? |
| Liquidity | How easily a share can be bought or sold without moving its price. High liquidity means tight spreads and little price impact, while low liquidity makes prices easier to manipulate. |
Trading & Pricing
The mechanics of getting in and out of a position, and what the price actually means.
| Term | Definition |
|---|---|
| Order book | The live list of all open bids and asks for a market, ranked by price. Buy and sell orders are matched against it to execute trades. |
| Bid | An open order to buy a share at a specified price. |
| Ask | An open order to sell a share at a specified price. |
| Spread | The gap between the highest bid and lowest ask. A narrow spread usually signals agreement on price, while a wide one signals uncertainty or thin trading. |
| Limit order | An order that sits on the book at a price you set, filling only if someone trades against it. |
| Market order | An order that fills immediately against the best available price on the book, instead of waiting. |
| Maker | A trader who places a limit order that stays on the book until someone else fills it. They pay no trading fees, and can earn rebates. |
| Taker | A trader who fills an existing order on the book. They pay the trading fees for the privilege. See How Prediction Market Fees Work. |
| Implied probability | The probability a share's price represents: price in cents divided by 100. A YES share at 24¢ implies a 24% chance. |
| Expiry | The date a market resolves and pays out. |
Resolution & Settlement
What happens once the real-world event is over. For the full mechanics, see How UMA's Optimistic Oracle Powers Prediction Market Resolutions.
| Term | Definition |
|---|---|
| Resolution | The process that confirms a market's outcome: reporting it, giving people a window to challenge it, and settling shares once it's final. |
| Oracle | A bridge between a blockchain and the outside world, responsible for bringing real-world data (election results, sports outcomes) on-chain so a market can resolve. |
| Reporter | The person, oracle, or process responsible for proposing a market's outcome. |
| Challenge window | The period after an outcome is proposed during which it can be disputed. |
| Dispute | A formal challenge to a proposed outcome, typically requiring posted collateral and escalating to a higher-trust process. |
| Settlement | The final step of resolution, where YES/NO shares convert to their settlement value and pay out. |
Frequently Asked Questions
What's the difference between a share and a contract?
Same thing, different name. "Share" is the term used on Predict and most modern platforms; "contract" is older terminology from earlier prediction markets.
Why does a market's price move if nothing's happened yet?
Price reflects the crowd's current view of the probability, not a final answer. New information, trading volume, and time to expiry all shift that view before the event itself resolves anything.
Is "odds" the same as a share's price?
Not quite. A share's price is a probability (price in cents ÷ 100), not betting odds. A 24¢ share means a 24% implied chance, not "24-to-1."
Where can I find deeper definitions for oracle or fee-specific terms?
This page covers the core vocabulary. For oracle mechanics, see the UMA Optimistic Oracle glossary; for fee specifics, see How Prediction Market Fees Work.
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