Trading Fundamentals
Prediction market trading looks simple on the surface. You buy YES or NO, the market resolves, and you either win or lose.
The hard part is understanding what the price means, how your order gets filled, and where the real risks come from.
This section covers the core mechanics that every trader should understand before trying more advanced strategies.
What you should learn first
- How a market price maps to implied probability
- The difference between binary markets and multi-outcome markets
- How order books and automated market makers work
- Why liquidity, spread, and slippage matter
- How settlement rules affect your real risk
Core topics in this section
Why fundamentals matter
Most bad trades do not come from bad forecasting alone. They come from bad execution.
A trader can be directionally right and still lose money because they overpaid, traded into a thin market, misunderstood the resolution rules, or ignored fees and slippage. Good fundamentals help you avoid those mistakes.
How to use this section
If you are new, read the pages in this order:
- Binary and multi-outcome pricing
- Implied probability
- Order books vs AMMs
- Slippage, liquidity, and spreads
- Then move to strategy pages like position sizing or hedging
If you already trade, use this section as a reference whenever you need to sanity-check how a contract is priced or executed.
FAQ
Is this section only for beginners?
No. The concepts are basic, but they stay relevant even if you build bots or trade professionally.
What is the biggest mistake new traders make?
Treating a market price like a simple opinion poll instead of a tradable price with liquidity, spread, and settlement risk behind it.
What should I read next?
After this section, the best next stop is Strategies if you want trading ideas, or Risk Management if you want to avoid common trading mistakes.