> For the complete documentation index, see [llms.txt](https://docs.txflow.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.txflow.com/prediction/overview.md).

# Overview

### What are Prediction Markets?

Prediction markets let you trade on the outcome of future events.

Each market asks a specific question, such as:

> Will BTC be above $100,000 at 08:00 UTC on September 30?

Depending on the market, you can take a position on **YES**, **NO**, or one of several possible outcomes.

### Price Represents Probability

Prediction market prices can be interpreted as the market's implied probability of an outcome.

For example:

| YES Price | Implied Probability |
| --------- | ------------------- |
| $0.20     | \~20%               |
| $0.50     | \~50%               |
| $0.80     | \~80%               |

If YES trades at **$0.65**, the market is pricing the event at approximately a **65% probability**.

Prices change continuously as traders update their views and place orders.

### YES and NO

In a binary market:

* **Buy YES** if you believe the event is more likely to happen than the current YES price implies.
* **Buy NO** if you believe the event is less likely to happen than the current YES price implies.

For example, if YES trades at $0.40, the market implies an approximately 40% probability. If you believe the actual probability is higher, you may choose to buy YES.

YES and NO prices generally satisfy:

`YES Price + NO Price ≈ $1.00`

Small differences may appear because of the bid ask spread and available liquidity.

### How Payouts Work

Outcome shares settle after the market is resolved.

* If your outcome wins: `1 winning share = $1.00`
* If your outcome loses: `1 losing share = $0`

Example:

1. You buy 100 YES shares at $0.60.

`Cost = 100 × $0.60 = $60`

2. If YES wins:

`Settlement Value = 100 × $1.00 = $100`

`Profit = $100 - $60 = $40`

3. If YES loses:

`Settlement Value = $0`

`Loss = $60`

Trading fees are excluded from the example above.

{% hint style="info" %}
Prediction market prices reflect market expectations and do not guarantee future outcomes. If your position settles at $0, you may lose the full amount paid for that position.
{% endhint %}

### You Can Exit Before Resolution

You do not need to hold a position until the event is resolved.

If there is sufficient market liquidity, you can sell your shares before resolution.

For example:

You buy YES at $0.40.

Later, YES trades at $0.70.

You can sell your position and realize the price difference without waiting for the final event result.

Actual execution depends on available liquidity and the price at which your order is filled.

### Prediction Markets vs Perpetual Futures

Prediction markets behave differently from perpetual futures.

Prediction market positions represent exposure to a specific event outcome and have a final settlement value of either $1 or $0.

<table data-header-hidden><thead><tr><th width="163.14453125"></th><th></th><th></th></tr></thead><tbody><tr><td><br></td><td>Perps</td><td>Predictions</td></tr><tr><td>You trade</td><td>The price of an asset</td><td>The outcome of an event</td></tr><tr><td>Direction</td><td>Long or short</td><td>Yes or no</td></tr><tr><td>Leverage</td><td>Up to 60x</td><td>None. Always 1x</td></tr><tr><td>Expiry</td><td>None. Hold as long as your margin holds</td><td>Settles when the event resolves<br></td></tr><tr><td>Price means</td><td>Market price of the underlying asset</td><td>mplied probability of an outcome. 63¢ ≈ 63%</td></tr><tr><td>Payoff</td><td>Scales with the move and your leverage</td><td>$1 if you're right, $0 if not</td></tr><tr><td>Max loss</td><td>Liquidation risk with leverage</td><td>Capped at what you paid</td></tr><tr><td>Fees</td><td>VIP tier rates</td><td>Market-specific trading fees</td></tr><tr><td>Funding fee</td><td>Paid or received while your position is open</td><td>None</td></tr></tbody></table>

### Events Provider

Prediction markets available on TxFlow are provided by [**Probly**](https://www.probly.com/en).

TxFlow provides the trading experience through the TxFlow interface.

### Important

See [**Probly**](https://docs.probly.com/) documentation for more information. Be aware of elevated risk, including but not limited to low liquidity, incomplete documentation, imperfect settlement, and incorrect outcome.&#x20;

**Prediction markets are excluded from the points program. Full rules are coming at launch.**