Key terms for prediction market trading.
Exploiting price differences to lock in risk-free profit. On Polymarket, this means buying YES + NO for less than $1.00, or trading the same event across platforms.
The lowest price at which someone is willing to sell shares. When you buy at market price, you pay the ask.
The highest price at which someone is willing to buy shares. When you sell at market price, you receive the bid.
Betting against the prevailing market sentiment when the crowd has overreacted.
A set of bets that guarantees profit regardless of outcome. Exists when YES + NO sum below $1.00.
Your advantage over the market price. The difference between your probability estimate and the market's implied probability.
The average outcome if a bet is repeated many times. EV = (Probability x Payout) - Cost.
The probability reflected by the share price. A $0.65 YES share implies 65% probability.
How easily you can trade without moving the price. High liquidity = tight spreads.
A trader who posts limit orders adding liquidity. Earns rebates on Polymarket.
All open buy and sell orders for a market, organized by price.
Amount by which total implied probabilities exceed 100%. The market's built-in cost.
Determining a market's outcome and paying winners. Uses UMA's decentralized oracle.
Difference between expected and actual execution price.
Difference between bid and ask price. Tighter = lower cost.
A trader whose orders fill immediately against existing orders. Pays fees.
Vigorish. The built-in trading cost reflected in the overround.
Last updated: March 2026 · All strategies · FAQ