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Prediction markets · glossary
Prediction market glossary: every term, plainly
The words you'll meet on any prediction market, from contracts and combos to spreads, fees and settlement, with one-line definitions and links to the tools that use them.
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- Ask
- The lowest price a seller will currently accept. You pay the ask when you buy now.
- Base rate
- How often an outcome has happened in comparable past cases, measured the way the contract settles.
- Bid
- The highest price a buyer will currently pay. You get the bid when you sell now.
- Break-even hit rate
- How often a contract must settle yes for you to come out even. It equals your all-in cost per contract in cents. Use it →
- Combo
- One contract built from several legs that pays $1 only if every leg settles yes. Called a parlay at a sportsbook. Use it →
- Combo tax
- The markup on a combo quote over its legs multiplied together. Use it →
- Contract
- A claim that pays $1 if an outcome happens and $0 if it doesn't.
- Depth
- How many contracts are available at a price level in the order book.
- Event contract
- The regulated name for a prediction market contract on a real-world outcome.
- Expected value
- Your probability of yes × $1, minus what you pay including fees, per contract. Use it →
- Fee
- What the exchange charges per order, often scaled by rate × P × (1 − P). Use it →
- Field
- A set of outcomes in one market where exactly one settles yes, such as every team's title price. Use it →
- First print
- The first published value of a data release. Many contracts settle on it, even if it is revised later.
- Hedge
- Buying the opposite side to limit what you can lose. Use it →
- Implied probability
- The probability a price suggests. A 62¢ contract implies about 62%. Use it →
- Leg
- One outcome inside a combo. Use it →
- Limit order
- An order with the worst price you'll accept. It waits if the market isn't there.
- Lock
- Holding equal numbers of yes and no so the result is the same either way. It only profits if the two prices add up to less than 100¢. Use it →
- Market maker
- A participant who posts both bids and asks and earns the spread. Market makers quote most combos.
- Market order
- An order that fills now at whatever the book offers.
- Mid
- The midpoint between the best bid and the best ask.
- Odds
- Another way to write a price. 40¢ equals +150 American and 2.50 decimal. Use it →
- Overround
- How far a complete field's prices add up above 100¢. Use it →
- Parlay
- The sportsbook name for a combo. Use it →
- Prediction market
- A market that lists contracts on real outcomes, priced between 0¢ and 100¢. Use it →
- Quote
- A price offered for a combo on request. Quotes expire when leg prices move.
- Same-game combo
- A combo whose legs come from one game, so they tend to move together. Use it →
- Settlement
- When and how a contract's outcome is decided and paid. Use it →
- Settlement source
- The named source that decides the outcome, such as the agency or the official result. Use it →
- Slippage
- Paying worse than the best price because the order is bigger than the depth there.
- Spread
- The gap between the best bid and the best ask. You pay it each time you cross it.
- Strike
- The value a contract is measured against, such as 0.3% for a CPI contract. Check whether the strike itself counts.
- Title contract
- A contract on winning a whole tournament or season, which behaves like a combo across rounds. Use it →
Questions
What is a prediction market?
A market that lists contracts on real outcomes, such as games, economic releases, elections or the weather. Each contract pays $1 if it settles yes and $0 if it doesn't.
What does a contract price mean?
The price in cents reads roughly as the market's probability. A 62¢ contract implies about 62%.
What is the difference between a combo and a parlay?
None in structure. Both are one contract that pays only if every leg settles yes. Prediction markets usually call them combos; sportsbooks call them parlays.
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