Prediction market glossary: 40 terms in plain words

Forty terms used in prediction markets and forecasting, each defined in one sentence with one example. The terms are grouped by where you meet them: market mechanics, probability and scoring, resolution, platforms, and the words insiderz uses. Nothing here assumes you have traded anything.

How do you use this glossary?

Each entry has the same shape: a heading, one sentence of definition, one sentence of example. Read the section you need and skip the rest.

Four numbers anchor most of the vocabulary. Keep them in mind while reading.

Anchor	Value	What it means	Source date
Coin flip Brier score	0.25	What you score by saying 50 percent to everything	28 February 2025
Superforecaster mean Brier score	0.096	ForecastBench human question set	28 February 2025
Polymarket resolution bond	750 USDC.e	Posted to propose an outcome	11 January 2026
Polymarket challenge period	2 hours	Window to dispute a proposed outcome	11 January 2026

Sources: Karger et al., arXiv:2409.19839 and Polymarket Help Center.

Market mechanics terms

Prediction market

In one sentence: a market where people trade contracts on whether an event will happen, so the contract price reads as the probability of that event.

In one example: a contract on a central bank rate cut trading at 34 cents says the market puts the cut at about 34 percent.

Event contract

In one sentence: the tradable unit of a prediction market, a contract that pays 1 if a stated event occurs and 0 if it does not.

In one example: one yes contract on "the incumbent wins" pays 1 dollar if the incumbent wins and nothing otherwise.

Binary market

In one sentence: a market with exactly two outcomes, yes and no, whose prices must add up to about 1.

In one example: if yes trades at 0.62, no should trade near 0.38.

Order book

In one sentence: the live list of buy and sell orders at each price, which is where a market price actually comes from.

In one example: the last trade shows 0.41 because a buyer's bid met a seller's offer at 0.41, not because anyone set that number.

Bid and ask

In one sentence: the bid is the highest price someone will pay right now, the ask is the lowest price someone will sell at right now.

In one example: a bid of 0.40 and an ask of 0.43 means you buy at 0.43 and sell at 0.40.

Spread

In one sentence: the gap between the bid and the ask, which is the immediate cost of entering and leaving a position.

In one example: a 3 cent spread on a 40 cent contract means you start about 7 percent behind.

Liquidity

In one sentence: how much can be traded without moving the price much.

In one example: a market with millions of dollars of resting orders barely moves on a 1,000 dollar trade, while a thin market jumps several cents.

Market maker

In one sentence: someone who posts both a bid and an ask continuously and profits from the spread rather than from being right.

In one example: a market maker quoting 0.40 bid and 0.42 ask keeps a price on screen even when nobody has an opinion.

Whale

In one sentence: a trader whose position is large enough to move the price by themselves.

In one example: reporting on the October 2024 surge in Trump's Polymarket odds attributed it largely to about 1 percent of the platform's users.

Probability and scoring terms

Implied probability

In one sentence: the probability you read off a price, which for a contract paying 0 or 1 is simply the price.

In one example: 34 cents is 34 percent, 50 cents is a coin flip, 95 cents is near certainty.

Base rate

In one sentence: how often things of this type happen in general, before you look at the specifics of this case.

In one example: incumbent governments in a given country have won 7 of the last 10 elections, so 70 percent is the starting point.

Brier score

In one sentence: the average squared distance between your probability and the outcome, coded 1 or 0, where lower is better.

In one example: saying 80 percent to something that happens scores 0.04 for that question, because 0.2 squared is 0.04.

Calibration

In one sentence: whether claims made at a given confidence come true at that rate.

In one example: if your 70 percent claims come true 70 percent of the time you are calibrated, and if they come true 45 percent of the time you are overconfident.

Sharpness

In one sentence: how far your probabilities move away from 50 percent.

In one example: a forecaster who says 50 percent to everything is perfectly calibrated and completely useless because they have no sharpness.

Overconfidence

In one sentence: giving probabilities further from 50 percent than the evidence supports.

In one example: a run of 90 percent claims that come true only 60 percent of the time.

Underconfidence

In one sentence: giving probabilities closer to 50 percent than the evidence supports.

In one example: a 2026 study of 353 million trades on Kalshi and Polymarket found political prices chronically compressed toward 50 percent, so 70 cents a month out matched a true probability nearer 75 percent (Le, arXiv:2602.19520).

Favorite-longshot bias

In one sentence: the tendency for unlikely outcomes to be priced too high and likely outcomes too low.

In one example: contracts at 5 cents win less often than 5 percent of the time, which is why buying longshots is usually a slow loss.

Superforecaster

In one sentence: a forecaster who has repeatedly scored near the top in forecasting tournaments across many questions.

In one example: on the ForecastBench human question set superforecasters reached a mean Brier score of 0.096, against 0.121 for the general public (Karger et al., arXiv:2409.19839).

Horizon

In one sentence: how far in the future the resolution date sits, which is the single strongest predictor of how informative a price is.

In one example: the same question priced a year out and a week out carries very different information, and the year out price sits closer to 50.

Resolution terms

Resolution

In one sentence: the moment the outcome is decided against the market's written criteria, after which contracts pay 1 or 0.

In one example: once a market resolves yes, every yes share is worth exactly 1 dollar and every no share is worth nothing.

Resolution source

In one sentence: the specific place named in the rules that decides the answer.

In one example: a market that names one official agency resolves on that agency's publication, even if every newspaper says otherwise first.

Resolution criteria

In one sentence: the exact wording that defines what counts as the event happening.

In one example: a market asked whether Zelenskyy would be photographed wearing a suit between 22 March and 30 June 2025 and resolved no on 1 July 2025 despite wide reporting that he had (Decrypt, 9 July 2025).

Optimistic oracle

In one sentence: a resolution system that treats the first proposed answer as correct unless somebody disputes it within a set window.

In one example: Polymarket uses the UMA optimistic oracle, where an unchallenged proposal simply becomes the outcome.

Proposer

In one sentence: the person who submits the proposed outcome and puts up a bond behind it.

In one example: a proposer who submits the wrong answer, or submits too early, loses the whole bond.

Bond

In one sentence: money posted to back a proposal or a dispute, forfeited if the side that posted it turns out to be wrong.

In one example: on Polymarket the proposer bond is 750 dollars in USDC.e as of January 2026 (Polymarket Help Center).

Challenge period

In one sentence: the window during which anyone can dispute a proposed resolution before it becomes final.

In one example: Polymarket's challenge period is 2 hours, after which an unchallenged proposal stands.

Dispute

In one sentence: a formal challenge to a proposed outcome that escalates the question to a vote.

In one example: a disputed Polymarket resolution goes to UMA token holder voting, with a 24 hour commit period and a 24 hour reveal period (UMA Documentation).

Data Verification Mechanism

In one sentence: UMA's voting backstop, which settles disputes when at least 65 percent of staked tokens back a single outcome.

In one example: voters who abstain or side with the minority are slashed, and the slashed amount goes to the majority voters.

Platform terms

Polymarket

In one sentence: the largest crypto based prediction market, where outcomes are resolved through the UMA optimistic oracle.

In one example: Polymarket recorded 8.16 billion dollars of volume in August 2026 (Yahoo Finance, 2 September 2026).

Kalshi

In one sentence: a US exchange offering event contracts under CFTC regulation.

In one example: Kalshi recorded 37.17 billion dollars of volume in August 2026, more than four times Polymarket's.

Metaculus

In one sentence: a forecasting platform where people submit probabilities with no money at stake and are scored on accuracy.

In one example: Metaculus questions often run on horizons of years, where money markets have little to say.

Designated Contract Market

In one sentence: the US regulatory category for an exchange registered with the Commodity Futures Trading Commission to list contracts.

In one example: an exchange with this status can offer event contracts to US customers under federal rules rather than state gambling rules.

insiderz terms

Call

In one sentence: a public yes or no statement on a real event plus how sure you are, locked with the time and the market price at that moment.

In one example: a call of yes at 60 percent confidence on an event the market prices at 0.34 is a bet on your judgment against the price, with nothing at stake but your record.

Locked

In one sentence: the state a call enters the instant it is posted, with the time and the market price frozen and no editing or deleting afterwards.

In one example: a call locked at 14:32 UTC keeps that timestamp and that market price forever, whatever happens next.

Insider

In one sentence: someone ranked on the insiderz leaderboard for their record on real events.

In one example: an insider with a long list of resolved calls is a different proposition from one with three.

Proven

In one sentence: the status of someone whose record has held up across enough resolved events to be more than luck.

In one example: two correct calls are noise, and proven is what the record looks like after many more than two.

Beats market

In one sentence: the leaderboard column for how reliably someone's calls beat the market price they were locked against.

In one example: the column reads as a share of events, such as 12 out of 30.

Edge

In one sentence: the leaderboard column for how much better someone's probability was than the market price, averaged across their resolved calls.

In one example: consistently calling yes at 0.34 on things that happen produces a large Edge, while agreeing with 0.95 favorites produces almost none.

Early

In one sentence: the leaderboard column for whether the market moved toward a call before that call went public.

In one example: a high Early means the person was saying it before the price agreed, not after.

Live access

In one sentence: permission granted by an insider to a follower to see that person's calls the moment they are made, instead of after the public delay.

In one example: a follower asks for live access, and if it is granted they stop waiting for the delay to expire.

Terms people get wrong

Three phrases cause most of the confusion in this field.

• "The market said it would happen." A market at 70 cents did not say it would happen. It said it happens about seven times in ten, and the other three times are not failures.
• "Accuracy." Used loosely, it usually means the share of markets whose favorite won, which ignores confidence entirely. A Brier score is the number worth asking for.
• "Odds." In betting, odds are a payout ratio like 3 to 1. In prediction markets the quoted number is already a probability, so no conversion is needed.

Where do these terms appear on a live event?

Every open event on Events shows the market price, the resolution rules and the calls made on it once their delay has expired. The leaderboard shows Beats market, Events, Edge and Early side by side. For the concepts behind the vocabulary, read how a price becomes a probability and what a 34 percent chance actually means.