2,172 words, 11 minutes read time.

Prediction markets borrow language from finance, betting, and survey research, but most platforms converge on a common set of concepts. Below are the core terms and how they fit together in practice.

Explanations

Event and Outcome

• Event: The real‑world thing with an uncertain future result, such as “2028 U.S. presidential election” or “Fed funds rate on Dec 31, 2026.” It is what the market is ultimately about.
• Outcome: One of the mutually exclusive possibilities for that event, such as “Democrat wins,” “Republican wins,” or specific rate levels like “≥ 5%.” Outcomes must be clearly defined and objectively checkable.

Market, Series, and Question/Title

• Market: The tradable “container” associated with a specific event and a defined set of outcomes. For example, a yes/no market: “Will X happen by Y date?” or a multi‑outcome market with several candidates.​
• Series: A group of related markets under a shared theme or event family, such as a set of markets on one election (national result, turnout, state‑by‑state outcomes) or on recurring economic releases (monthly Consumer Price Index (CPI) markets).
• Title / question: The human‑readable label for the market, usually in question form: “Will the S&P 500 close above 5000 on Dec 31, 2026?” The text must precisely specify the resolution conditions to avoid ambiguity.

Contract, Share, and Position

• Contract (or share): The basic instrument traded in a prediction market, tied to a particular outcome. In a binary market, a “Yes” contract pays a fixed amount (often 1 unit of currency) if the event occurs and 0 otherwise.
• Share: Often used interchangeably with contract; a unit of exposure to a given outcome. Holding 10 “Yes” shares at a price of 0.40 is a bet of 4 units with a maximum payoff of 10 if “Yes” resolves true.
• Position: The net quantity of contracts a trader holds across one outcome or across all outcomes in a market (e.g., long 50 “Yes”, short 20 “No”). Positions summarize the trader’s exposure and risk.

Price, Probability, and Payout

• Price: The current trading value of a contract, usually quoted between 0 and 1 (or 0 and 100 cents). In a binary market, the price reflects the crowd’s implied probability of that outcome.
• Implied probability: The probability signal extracted from the price. For a $1‑payout binary contract, a price of 0.73 corresponds to an implied 73% chance of the event happening, ignoring fees and edge cases.
• Payout (settlement value): The amount a contract is worth after the market resolves. Binary contracts usually pay 1 if the outcome occurs and 0 if not; multi‑outcome contracts pay 1 on the winning outcome and 0 on the others.

Trading Mechanics (Orders, Liquidity, Spread)

• Order book: The list of current buy and sell offers for contracts in a market, typically sorted by price and size. It shows available liquidity and helps traders estimate how their orders will fill.​
• Limit order: An instruction to buy or sell a given quantity at a specific maximum (for buys) or minimum (for sells) price. It may not execute immediately, but it gives control over the worst-acceptable price.​
• Market order: An instruction to buy or sell immediately at the best available prices in the order book, prioritizing execution speed over price certainty.​
• Liquidity: How easily traders can enter or exit positions without moving the price much. High liquidity means tighter spreads, larger available order sizes, and faster execution.
• Bid–ask spread: The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). A smaller spread typically indicates a more liquid and efficient market.​

Market Making, Fees, and Slippage

• Market maker: A participant (human or algorithmic) that continuously posts both buy and sell orders to keep trading active and prices responsive. On some platforms, this is an automated market maker (AMM) rather than a traditional order book maker.
• Maker / taker fee: A fee structure where “makers” who post limit orders that add liquidity pay lower fees (or earn rebates), while “takers” who hit existing orders with market orders pay higher fees.​
• Slippage: The difference between the expected price when placing an order and the actual average price at which it fills, usually due to limited depth in the order book or rapid price moves.​

Resolution, Oracle, and Settlement

• Resolution: The formal determination of which outcome actually occurred once the event is over. Resolution follows predefined rules and a stated data source (e.g., official election commission or government statistic).
• Resolution source / oracle: The specified provider of truth used for resolving the market, such as a particular news organization, a government agency, or a blockchain oracle in decentralized markets.
• Settlement: The process of converting contracts into cash or tokens after resolution, paying winning positions and making losing positions worthless (or marking them to 0).

Binary, Multi‑Outcome, and Event Contracts

• Binary market: A market with only two outcomes, typically “Yes” and “No.” Contracts in such markets pay a fixed amount if the chosen side is correct and 0 otherwise.
• Multi‑outcome market: A market with more than two mutually exclusive outcomes, common for elections with many candidates or awards with several nominees.
• Event contract: A regulated short‑term product that lets traders take a “Yes” or “No” position on whether an underlying financial market will finish above or below a certain level by a given time, with fixed payouts.

Platform‑level Notions (Category, Domain, User)

• Category / Domain: The topical grouping of markets (e.g., politics, sports, crypto, macro), helping users navigate markets within areas of interest or expertise.
• User / Trader / Participant: Any person or entity that buys or sells contracts, providing information and liquidity through their trades.

Examples

Below, each term is tied to a concrete, live‑style example on Polymarket and Kalshi, making it easier to visualize how they appear on screen.

Event and Outcome

• Polymarket – Event: On the Politics page, “Portugal Presidential Election” appears as a higher‑level event, under which several markets may exist (e.g., who wins, first‑round outcome, turnout).​
• Polymarket – Outcomes: In a “Portugal Presidential Election: Who will win?” market, outcomes are the candidate names; each has its own quote such as 0.19 for “Candidate A,” 0.31 for “Candidate B,” etc.​
• Kalshi – Event: A CPI listing such as “What will monthly inflation be in the April 2025 US CPI?” is the event, shown as a tile you click into from a category page.
• Kalshi – Outcomes: Inside that CPI event, outcomes are ranges like “over 0.3%,” “0.3% or under,” each with its own contract price (e.g., 0.32 for “over 0.3%,” 0.72 for “0.3% or under”).

Market, Series, and Question/Title

• Polymarket – Market: The tile “Fed decision in January?” is a single market with “Yes” and “No” outcomes; the card shows the title, latest price, and volume.
• Polymarket – Series (event containing markets): In Polymarket’s backend structure, an “Event” can contain one or more markets—e.g., a general election event with separate markets for “Who will win?” and “Will there be a runoff?”
• Polymarket – Question/title: A market might be titled “Who will Trump nominate as Fed Chair?” with that full sentence appearing on the tile and at the top of the market page as the resolution question.​
• Kalshi – Market (event contract): “Will core CPI for April 2025 be ≥ 0.3%?” appears as a single yes/no event contract with its own order book and chart; that exact English sentence is the question/title.
• Kalshi – Series: Kalshi groups related monthly releases (e.g., CPI for different months, or repeated FOMC decisions) into a category so that, on screen, you see a lineup of very similar CPI markets differing only by month or threshold.

Contract, Share, and Position

• Polymarket – Contract/share: In a binary politics market (e.g., “Will Gov. Gavin Newsom win the 2028 presidency?”), a “Yes” share priced at 0.19 means paying 0.19 USDC now for a claim that settles to 1 USDC if Newsom wins and 0 if not.
• Polymarket – Position view: In the portfolio page, you might see “Newsom 2028 – YES: +500 shares @ avg price 0.18,” summarizing your open position in that specific outcome.
• Kalshi – Contract/share: In the April CPI event, buying 1 “Over 0.3%” contract at 0.32 costs 0.32 dollars and pays 1 dollar if the realized CPI is above 0.3%; that instrument is the contract/share.
• Kalshi – Position: The account screen can show “April CPI > 0.3%: +20 YES @ 0.31,” giving you a compact statement of exposure for that outcome only.

Price, Implied Probability, and Payout

• Polymarket – Price on screen: A Miami Heat market in Polymarket docs uses the example: if “Heat to win” is trading at 0.63, the interface shows 0.63 (or 63%) next to that outcome.
• Polymarket – Implied probability: The 0.63 price is explicitly described in the docs as the market‑implied 63% chance of that outcome, often labeled “odds” or “probability” beside the price.
• Polymarket – Payout: The FAQ explains that a correct “Yes” share always settles at 1 USDC, and an incorrect share at 0; the UI shows “Payout: 1.00 if YES resolves, 0.00 otherwise.”
• Kalshi – Price and implied probability: The CPI paper notes a 0.32 price for “over 0.3%” and 0.72 for “0.3% or under,” corresponding to 32% and 72% implied probabilities; the Kalshi UI shows these as 32 and 72 next to each line.
• Kalshi – Payout: Each line is described with a fixed $1 settlement rule: if the statement on the line comes true, the contract pays 1; if not, it pays 0.

Order Book, Order Types, Liquidity, Spread

• Polymarket – Order book: A technical article describes Polymarket’s central limit order book, where each event has its own book showing rows of bids and asks, sizes, and prices for YES/NO shares.
• Polymarket – Limit vs market order: Polymarket’s docs state that “limit orders specify a price and wait for a match” and “market orders execute immediately at best available prices”; the trade ticket lets you choose the type and shows expected fill.
• Polymarket – Liquidity and spread on screen: For a busy political market, the order book shows many levels of bids and asks only a cent or two apart, visually signaling high liquidity and a tight bid–ask spread (e.g., bid 0.67 / ask 0.68).
• Kalshi – Order book: Screenshots in explanatory material show, for each CPI line, a table of “YES bid,” “YES ask,” and sizes, with all prices in whole cents (e.g., bid 31, ask 33), making the spread visually obvious.
• Kalshi – Liquidity and spread: In an active contract like “Will Congress pass Bill X by Dec 31?,” there may be large queued orders on both sides, with a narrow difference between best bid and ask, indicating strong liquidity.

Resolution, Oracle, and Settlement

• Polymarket – Resolution text: Each market page has a “Resolution” or “Rules” section stating the source, such as “This market resolves according to the official result reported by the Associated Press” or a specified government site.polymarket+1​
• Polymarket – Oracle: In documentation, the resolution mechanism is described as an oracle that checks the pre‑specified data source and then updates the underlying smart contracts so YES/NO shares settle to 1 or 0.
• Polymarket – Settlement: After resolution, users see balances updated in their wallet; markets in the interface show “Resolved” with the winning outcome highlighted and others greyed out at price 0.
• Kalshi – Resolution rule: Kalshi’s event pages explain the source explicitly, e.g., CPI markets resolve using the U.S. Bureau of Labor Statistics release, with the exact series code and release time specified in the rules.
• Kalshi – Settlement: Once the outcome is known, the platform automatically credits 1 dollar per winning contract and 0 for losers; the position page shows realized P&L and sets the now‑resolved event to a historical state.

Binary, Multi‑Outcome, and Event Contracts

• Polymarket – Binary market: The docs glossary gives “Binary Market: A market with exactly two outcomes: Yes and No; prices sum to approximately $1,” matching the visual design of common politics markets.
• Polymarket – Multi‑outcome market: Elections like “Portugal Presidential Election – Who will win?” show multiple candidates, each as a separate line with its own price, volume, and chart, but all nested under the same event tile.
• Kalshi – Event contract: Articles about Kalshi describe a simple yes/no contract such as “Will the federal funds rate be above 5% after the next FOMC meeting?” with $1 payoff, presented in the UI exactly like other event contracts.​
• Kalshi – Multiple lines in one event: The CPI example shows several mutually exclusive ranges in one event, but each range is a separate contract line the user can trade; on screen they appear as a stacked list of binary contracts.

Category/Domain and User/Trader

• Polymarket – Category/domain: The top‑level navigation includes sections like “Politics,” “Finance,” “Crypto,” each of which filters the grid of markets to that topic; e.g., the Politics page shows only political events like elections and legislation.​
• Polymarket – User/trader view: Logged‑in users see a portfolio section listing all markets where they hold shares, with each row showing event title, side (YES/NO or candidate), current price, size, and unrealized profit.
• Kalshi – Category/domain: Kalshi highlights thematic areas such as “Inflation,” “Elections,” “Economy,” which bundle series like CPI, unemployment, and congressional outcomes under a single tab.
• Kalshi – User/trader view: The dashboard displays open positions (e.g., “20 YES CPI > 0.3%”) and cash balance, giving a snapshot similar to a brokerage account but focused entirely on event contracts.

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