BASICS
What a Prediction Market Is, and Why the Price Is Really a Probability
On Polymarket you don't trade stocks or crypto — you trade questions. We'll show you how a 64-cent price reads as a 64% probability, and what happens the moment big money enters the market.
On a stock exchange, you buy a piece of a company. On a crypto exchange, you buy a coin. On a prediction market, you buy an answer to a question — and when you're right, it pays out exactly one dollar. All of Polymarket rests on that one sentence. The rest is details, and we're about to go through them.
A question has to be phrased so that once the deadline passes, there's no room to argue how it turned out. "Will party X win the election?" — yes. "Will year X be a good one?" — no, that's not a question, that's a mood. Every question has two sides to the bet: YES and NO. One of them pays a dollar a share at the end, the other pays nothing.
The Price Is a Probability, Just Wearing a Different Coat
The YES share trades somewhere between 1 and 99 cents. And because it pays out exactly one dollar, you can read the price directly as the probability all the traders combined give that question. A share at 64 cents means a 64% chance. There's nothing more complicated to it — it's just hard to believe until you've played with it yourself.
With $100 you buy 156.3 YES shares. The market says the odds are 64% — betting NO is cheaper, but it only pays out in the remaining 36% of cases.
Notice the symmetry: the more certain the market thinks an answer is, the less there is to gain from it. A share at 95 cents nets you a five-cent profit — and if it doesn't come through, you lose the full 95. Cheap shares look tempting for exactly the reason the market expects them to fail. A low price isn't a discount — it's a warning.
So Who Actually Sets the Price?
Nobody. Or more precisely: everybody, all at once. There's no bookmaker sitting in an office writing up the odds. The price is just the latest matchThe price comes from matching orders. When someone wants to buy for more than the lowest sell offer, the trade goes through — and that price becomes the current one. between what someone is willing to pay and what someone else is willing to sell for. When a big buy hits the market, it chews through the offers starting with the cheapest, and the price jumps.
Try it yourself. Buy in and watch what it does to the price:
The market starts at fifty — perfect uncertainty. Every buy eats into the offer on one side and the price shifts.
This model is heavily simplified, but the principle holds: the price moves according to how much money flows to which side. And this is exactly where the reason PolyTips exists begins.
Why We Watch the Big Wallets
On a market where the price is made of money, the biggest signal comes from whoever brings the most of it. When someone sends a hundred thousand dollars into a single question, that's not chance or a hunch — someone is backing that call with their own wallet. We call addresses like that sharks. They're not infallible, but their move is visible before the price even has time to settle.
The magic is that on the blockchain, that move is public. Nobody has to comment on it or admit to it — the transaction is visible the moment it goes through. So the gap between "I know" and "I don't know" comes down to whether anyone's watching. We're watching around the clock.
Two Things People Trip Over Most
Spread. There's usually a gap between the highest buy offer and the lowest sell offer. On heavily traded questions it's a cent or two, on obscure ones it can easily be ten. You always buy at the top edge and sell at the bottom one — on a thin market, that gap eats you alive before you even get a chance to be wrong about your call.
Liquidity. Someone has to actually buy your share for you to exit before the deadline. In a shallow market, your own sale drags the price down — even when you're right. That's why with our tips we always look at how much money is really sitting in a question, not just which way the price is moving.
What to Take Away
- A share pays out $1, so its price in cents is directly the probability in percent.
- A cheap share isn't a discount — it's the market's estimate that it won't happen.
- The price isn't set by a bookmaker — it's set by the money flowing into the market.
- Big wallets are visible on the blockchain. Their move is information that's public before it even shows up in the price.
- Check the spread and liquidity before the price. On a thin market, even a good call can lose money.
Before you start, you need two things: a wallet, and a basic sense of calm about what's happening under the hood. We've got both coming up next.