What Is Polymarket? Prediction Markets Explained

Polymarket is a prediction market. Instead of betting against a bookmaker, you buy and sell shares in the outcome of a real-world event — an election, a Fed rate decision, a sports final — and the price of each share moves with the crowd's collective view of what will happen. This guide explains how Polymarket works, how its prices translate into odds, and how a market settles. Polyspect is an independent analytics platform built on top of Polymarket's public data and is not affiliated with Polymarket.

What is a prediction market?

A prediction market is a place where people trade contracts tied to a future event. Each contract pays out a fixed amount if the event happens and nothing if it doesn't. Because traders put real money behind their opinions, the price tends to reflect the market's best estimate of the probability of that outcome.

On Polymarket, most markets are binary: there's a YES side and a NO side. You pick the side you think is correct, buy shares at the current price, and either sell later or hold until the market resolves.

How does Polymarket work?

Polymarket runs on a public order book, similar to a stock exchange. Here is the basic flow:

1. A market opens with a clear, verifiable question — for example, "Will candidate X win the election?"
2. Traders place orders. Buyers and sellers post the prices they're willing to trade at, and the order book matches them.
3. Prices move as new information arrives and sentiment shifts.
4. The market resolves once the real-world outcome is known, and winning shares pay out.

You can enter or exit at any time before resolution. If a YES share you bought at $0.40 climbs to $0.70, you can sell and take the difference without waiting for the event to conclude.

How prices map to prediction market odds

This is the part that makes prediction markets click. Every share resolves to either $1 (if your side wins) or $0 (if it loses). So the current price reads directly as an implied probability:

• A YES share trading at $0.40 implies roughly a 40% chance the answer is yes.
• A YES share at $0.85 implies about an 85% chance.
• YES and NO prices in a binary market add up to about $1.00 — so if YES is $0.40, NO is around $0.60 (≈60%).

Your potential profit follows from that price. Buy YES at $0.40 and it resolves true, you collect $1.00 — a $0.60 gain per share. Buy it at $0.85 and you only stand to make $0.15, because the market already treats that outcome as likely. Cheaper shares carry bigger upside and bigger risk; that trade-off is the whole game.

How markets resolve and pay out

When the event concludes, the market settles to the verified result. The winning side's shares become worth $1.00 each and the losing side's shares become worth $0.00. If you're holding the correct outcome at resolution, your shares are redeemed for $1 apiece. Resolution sources are defined when the market is created, so the criteria are public before you ever place a trade.

Why this matters for traders

Because every trade and price is public, you can study who is actually good at this — not who got lucky once. A flashy win rate can hide a trader who risks $90 to win $10. That's where edge-led metrics like expected value, profit factor, and reward-to-risk come in. Learn what actually makes a trader profitable, then put it to work: compare traders side by side or mirror them risk-free on paper before committing real money.

New to the terminology? The glossary defines the terms used across prediction-market trading in plain language.

Get started with Polyspect

Polyspect ranks Polymarket traders on metrics that predict profit and lets you copy them — first on paper, then live with guardrails. Prediction-market trading carries real risk of loss, and past performance does not guarantee future results. Create a free account to explore the leaderboard and watch a virtual strategy track a real trader in real time.