What Is Event Trading? Learn How Event Contracts & Prediction Markets Work

The basics: How does event trading work?

As daunting as event trading might sound, it’s actually pretty straightforward when you nail down the basics. The first thing you’ll encounter on most prediction market sites is Yes or No event contracts based on simple questions, such as ‘Which party will win the U.S. Senate?’ or ‘Who will win the World Cup?’. From there, you can simply buy an event contract to back your prediction, completing the first step of event contract trading.

The contracts you buy are usually priced between $0.01 and $0.99, depending on the overall market sentiment. As a result, contracts tied to outcomes that the market considers to be more likely are generally pricier, while those linked to less likely events cost less. If your prediction is correct when the market settles, you’ll receive $1 per contract, while each losing contract settles at $0, regardless of the price you paid.

Occasionally, you might be able to sell your contract before a market settles and lock in profits or limit losses, but this only happens when there’s enough liquidity. Another important factor to consider is the fees charged by a prediction market site, as these can add up significantly, especially when compared to the individual contract prices. That said, platforms like Kalshi, Robinhood, and Polymarket have pretty reasonable fee structures, which, when combined with their transparent pricing and settlement terms, create a well-rounded trading experience.

How you can generally start trading on prediction market sites

There are numerous prediction market sites to choose from, but if there’s one thing they have in common, it’s their ease of use. That’s why trading event contracts is generally a hassle-free experience, and goes a lot like this across most platforms:

1. Follow the links on this page to one of the top prediction market sites available in your area.

2. Create a new account by filling out the registration form or signing up through supported methods like Google and Apple ID.

3. Complete account and location verification steps to confirm you’re an eligible trader.

4. Browse the available event contracts and find markets covering topics that interest you the most.

5. Buy event contracts at the listed prices, which typically range between $0.01 and $0.99.

6. Monitor your positions over time, keeping in mind the settlement rules and timelines.

7. If your prediction is correct, you’ll receive $1 per winning contract, while incorrect predictions settle at $0.

8. You can also exit certain positions before they settle if there’s enough liquidity.

Quick facts about event trading to clear the air

As you can see, event trading involves a simple process that even beginners can pick up with little practice. One of the many questions we get it: are prediction markets available within the US?

So many questions can arise when you’re just getting started, and that’s exactly why we are setting the record straight with the frequently asked questions and comprehensive answers below:

A summary of how event contract trading works

In the table below, we’ve put together the key points that define event trading. This will give you the essentials at a glance, whether you’re just learning how contracts work or comparing different prediction market sites:

Pros and cons of event trading

Even though getting started with event contract trading is easy as pie, it comes with both benefits and potential drawbacks. To help you understand exactly what to expect, here are the standout pros and cons we think you should keep an eye out for:

Pros and Cons

• A wide variety of outcomes to predict
• Simple and engaging experience
• Transparent settlement rules

• Some markets have a learning curve

Event trading is as straightforward as making predictions gets

That’s basically all there is to event contract trading. You start by creating an account on a prediction market site and browsing the available markets, spanning topics like sports, culture, politics, economics, tech, and crypto. Once you find a topic that interests you, you can then buy Yes or No event contracts priced between $0.01 and $0.99, depending on the overall traders’ expectations.

Once done, all that’s left is to wait for the market to settle, where you’ll receive $1 for each winning contract and $0 for incorrect predictions. Essentially, your profit or loss depends on the difference between the price you paid and the contract’s settlement value. If you’re considering trying event trading yourself, simply follow the links on this page, as they lead to some of the best prediction market sites for both beginners and advanced traders.

The prediction market sites worth your time

1.

3.8/5

Kalshi Review

Trade $25 Get $55

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2.

3.8/5

Crypto.com Review

Earn up to $300 in CRO

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FAQs about event trading