Prediction Market Glossary

A prediction market is an exchange where participants trade contracts whose payoff depends on the outcome of a future event. Prices in these markets reflect the collective probability estimate of the crowd. They have been shown to outperform polls and expert panels for forecasting elections, economic indicators, and other uncertain events. Modern prediction markets operate on both centralized platforms like Kalshi and decentralized protocols like Polymarket.

A binary market is a prediction market that resolves to one of exactly two outcomes — typically Yes or No. The market price of a Yes share represents the implied probability of the event occurring. For example, a Yes share trading at $0.70 implies a 70% probability. Binary markets are the most common format on platforms like Polymarket and Kalshi.

An outcome token is a digital asset that represents a specific outcome in a prediction market. Each token pays out $1 if its associated outcome occurs and $0 if it does not. On Polymarket, outcome tokens are ERC-1155 tokens on the Polygon network that are created through a conditional token framework. Traders buy and sell these tokens to express their views on the probability of events.

A Yes share is an outcome token that pays out $1 if the market resolves in favor of the event occurring. The price of a Yes share fluctuates between $0 and $1 based on market demand and reflects the implied probability of a Yes resolution. Buying Yes shares is a bet that the event will happen, and selling them is a bet that it will not.

A No share is an outcome token that pays out $1 if the market resolves against the event occurring. In a binary market, the price of a No share is the inverse of the Yes share — if Yes trades at $0.65, No effectively trades at $0.35. Traders buy No shares when they believe the market is overestimating the probability of an event.

Resolution is the process by which a prediction market determines its final outcome and settles all outstanding contracts. A market resolves when the event it tracks reaches its conclusion and an authoritative source confirms the result. On Polymarket, resolution is handled by the UMA optimistic oracle, which allows anyone to propose an outcome that is accepted unless disputed. After resolution, winning shares pay out $1 and losing shares become worthless.

Liquidity in a prediction market refers to the ease with which traders can buy or sell shares without significantly moving the price. High liquidity means there are many orders on the book at tight spreads, allowing large trades with minimal slippage. Markets with low liquidity can have wide bid-ask spreads, making it expensive to enter or exit positions. Liquidity is one of the most important factors when evaluating whether a market is tradeable.

A central limit order book (CLOB) is a trading system that matches buy and sell orders based on price and time priority. Polymarket uses a CLOB operated by a matching engine where traders submit limit orders that rest on the book until filled. This model provides price transparency and allows traders to see the full depth of available orders. It differs from automated market maker (AMM) models where prices are set by a mathematical formula.

A limit order is an instruction to buy or sell shares at a specific price or better. When you place a limit buy order at $0.60, it will only execute if a seller is willing to sell at $0.60 or less. Limit orders give traders price control but do not guarantee execution — if the market never reaches your price, the order remains unfilled. Most experienced prediction market traders use limit orders to manage their entry and exit prices precisely.

A market order is an instruction to buy or sell shares immediately at the best available price. Market orders guarantee execution but not price — in a thin order book, a large market order can experience significant slippage. On Polymarket, market orders are filled against the resting limit orders on the CLOB. They are best used in highly liquid markets where the spread between the best bid and ask is narrow.

Slippage is the difference between the expected price of a trade and the actual execution price. It occurs when there is insufficient liquidity at the desired price level, causing the order to eat through multiple levels of the order book. In prediction markets, slippage is most pronounced in low-liquidity markets or when placing large orders. Traders can minimize slippage by using limit orders or breaking large trades into smaller pieces.

An event contract is a financial contract whose value is determined by the occurrence or non-occurrence of a specific future event. Unlike traditional derivatives that are based on asset prices, event contracts are tied to real-world outcomes like election results, weather events, or economic data releases. In the United States, event contracts are regulated by the CFTC and traded on designated contract markets like Kalshi.

A market maker is a trader or automated system that provides liquidity by continuously posting both buy and sell orders on a market. Market makers profit from the bid-ask spread — the difference between the price they buy at and the price they sell at. In prediction markets, market makers play a critical role in keeping spreads tight and ensuring markets are tradeable. Many market makers on Polymarket use automated bots to manage their orders across dozens of markets simultaneously.

Implied probability is the market's estimate of the likelihood of an outcome, derived directly from the current trading price. In a binary prediction market, the Yes price is approximately equal to the implied probability — a Yes share at $0.72 implies a 72% chance of the event occurring. However, the bid-ask spread means the true implied probability falls within a range rather than a single number. Comparing implied probabilities across different markets can reveal arbitrage opportunities.

The spread is the difference between the highest bid price and the lowest ask price on an order book. A tight spread (e.g., $0.01) indicates a liquid, competitive market where buyers and sellers closely agree on value. A wide spread (e.g., $0.05 or more) suggests low liquidity and higher transaction costs for traders. Monitoring the spread is essential for understanding the true cost of trading in a particular market.

A position is a trader's current exposure to a specific outcome in a prediction market. A long position means the trader holds Yes shares and profits if the event occurs, while a short position (or holding No shares) profits if the event does not occur. The size of a position is measured by the number of shares held and the cost basis at which they were acquired. Managing position size relative to account balance is a key risk management practice.

An order book is the list of all outstanding buy and sell orders for a given market, organized by price level. It shows the depth of demand and supply at each price, giving traders visibility into how much liquidity is available. The order book is central to price discovery in CLOB-based prediction markets like Polymarket. Reading the order book helps traders understand market microstructure and identify support and resistance levels.

Market depth refers to the total volume of resting orders at each price level on both the bid and ask sides of the order book. A market with deep depth has large quantities of shares available at many price levels, meaning traders can execute large orders without significantly moving the price. Shallow depth means the order book is thin, and even moderate-sized trades can cause substantial price movement. Market depth is one of the most reliable indicators of a market's tradability and is closely related to liquidity.

Price discovery is the process by which a market determines the fair value of a contract through the interaction of buyers and sellers. In prediction markets, price discovery reflects the aggregation of diverse information, beliefs, and analysis from all participants into a single number — the market price. Efficient price discovery requires sufficient liquidity, a diverse set of informed participants, and a transparent trading mechanism. The CLOB model used by Polymarket facilitates price discovery by allowing any participant to post orders that contribute to the consensus estimate.

A thin market is a prediction market with low trading volume and limited order book depth, making it expensive and risky to trade. In thin markets, the bid-ask spread is wide, slippage is high, and a single large order can move the price dramatically. While thin markets sometimes contain the most mispriced opportunities, they also carry the greatest execution risk. Traders must weigh the potential edge against the cost of entering and exiting positions in low-liquidity conditions.

An exit strategy is a predefined plan for closing a prediction market position, either to lock in profits or to cut losses. Unlike traditional markets, prediction markets have a natural exit point — resolution — but traders can also sell shares before resolution on the secondary market. A sound exit strategy specifies the price levels at which you will take profit, the conditions under which you will cut your losses, and whether you intend to hold through resolution or trade out early. Having an exit strategy before entering a trade prevents emotional decision-making during volatile price moves.

Settlement is the final step in a prediction market's lifecycle where winning positions are paid out and losing positions are zeroed. On Polymarket, settlement occurs after the UMA optimistic oracle confirms the market's outcome, distributing $1 per winning share in USDC to holders. On regulated platforms like Kalshi, settlement is handled centrally based on official data sources. The settlement process determines the finality and trustworthiness of the market — delays, disputes, or ambiguous outcomes can complicate settlement and create uncertainty for traders with open positions.

Order types define the instructions a trader gives to the exchange about how and at what price their trade should be executed. The two fundamental order types in prediction markets are limit orders and market orders. A limit order specifies a maximum buy price or minimum sell price and only executes if the market reaches that price. A market order executes immediately at the best available price. Some platforms also support more advanced order types like good-til-cancelled (GTC) orders that remain on the book indefinitely and fill-or-kill (FOK) orders that must execute entirely or not at all.

The bid-ask spread is the difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask). It represents the immediate cost of trading and serves as compensation for market makers who provide liquidity. A narrow spread (e.g., $0.01) indicates a liquid market with competitive pricing, while a wide spread (e.g., $0.05 or more) indicates low liquidity and higher trading costs. The bid-ask spread is one of the most important factors to consider before entering any prediction market trade, as it directly reduces your potential profit.

Open interest is the total number of outstanding contracts or shares that have been created but not yet resolved or redeemed in a prediction market. It measures the total amount of capital committed to a market at any given time. High open interest indicates a market with significant participation and liquidity, while low open interest suggests limited engagement. Unlike trading volume, which counts every transaction, open interest only counts positions that are currently held. Open interest increases when new positions are created and decreases when existing positions are closed or markets resolve.

Volatility in prediction markets measures how much a market's price fluctuates over a given period. High volatility means the price swings widely — a market that moves from $0.40 to $0.60 to $0.45 in a single day is highly volatile. Low volatility means the price moves in a narrow range. Volatility is driven by the arrival of new information, changes in participant sentiment, and the proximity of the resolution date. Markets tend to be most volatile when new information arrives and when the outcome is uncertain, and least volatile when the outcome is nearly certain or when no new information is expected.

Unrealized P&L (profit and loss) is the paper gain or loss on positions that have not yet been closed or resolved. It is calculated as the difference between the current market value of your position and your cost basis. Unrealized P&L changes continuously as market prices move. It only becomes realized P&L when you sell your shares on the secondary market or the market resolves. Tracking unrealized P&L helps you understand the current state of your portfolio, but it should not be confused with actual profit — until a position is closed or resolved, the gain or loss remains theoretical and subject to change.

Cost basis is the total amount of capital you invested to acquire a prediction market position, including any accumulated purchases at different price levels. If you buy shares in multiple tranches — 500 shares at $0.45 and 500 shares at $0.50 — your average cost basis is $0.475 per share, or $475 total. Cost basis is essential for calculating your realized P&L when a market resolves: your profit is the payout minus your cost basis. Keeping accurate track of cost basis across multiple entries and exits is critical for evaluating the true profitability of your trades and for tax reporting purposes.

Arbitrage in prediction markets is the practice of exploiting price discrepancies to lock in risk-free profit. The most common form involves buying Yes and No shares across two platforms where the combined cost is less than $1, guaranteeing a profit regardless of the outcome. Within a single platform, arbitrage opportunities can arise in multi-outcome markets where the sum of all outcome prices deviates from $1. Arbitrageurs play a valuable role in keeping market prices efficient and consistent.

Accumulation is a strategy where a trader gradually builds a large position in an outcome they believe is mispriced, typically over hours or days. Rather than entering all at once and moving the price against themselves, accumulators place many small limit orders and patiently wait for fills. This approach minimizes market impact and achieves a better average entry price. 0xInsider's ML models detect accumulation patterns by analyzing trade frequency, size consistency, and directional bias over time.

Directional trading is the simplest prediction market strategy — taking a position based on a belief that the market price is wrong. A directional trader who believes an event has a 70% probability of occurring will buy Yes shares when they trade below $0.70. Profit comes from the difference between the purchase price and the final resolution value. Most retail prediction market participants are directional traders, even if they do not use that term.

Hedging is a risk management strategy where a trader takes an offsetting position to reduce exposure to an adverse outcome. In prediction markets, this might mean buying No shares in a related market to protect a Yes position if the two events are correlated. Hedging reduces potential profit but also limits downside risk. Sophisticated traders use hedging to maintain exposure to their highest-conviction ideas while managing overall portfolio risk.

Scalping is a high-frequency strategy that profits from small price movements by rapidly entering and exiting positions. Scalpers in prediction markets typically place limit orders on both sides of the book, capturing the spread as the price fluctuates. This strategy requires low fees, high liquidity, and fast execution to be profitable. On Polymarket, scalpers often use automated trading bots to manage orders across many markets simultaneously.

Pair trading in prediction markets involves taking opposing positions in two correlated markets to profit from the relative difference between them. For example, a trader might go long on one candidate and short on another if they believe the spread between the two is mispriced. This strategy is market-neutral — it does not depend on the overall direction of the market, only on the relative movement of the two positions. Pair trading requires careful analysis of correlations and historical price relationships.

The Kelly criterion is a mathematical formula used to determine the optimal size of a bet based on the trader's edge and the odds offered. It calculates the fraction of your bankroll that maximizes long-term growth while minimizing the risk of ruin. In prediction markets, the Kelly formula is: f = (bp - q) / b, where b is the decimal odds minus one, p is the probability of winning, and q is the probability of losing. Many professional traders use a fractional Kelly approach, betting a half or quarter of the full Kelly amount to reduce volatility.

Position sizing is the process of determining how much capital to allocate to a single trade relative to your total portfolio. Proper position sizing ensures that no single loss can significantly damage your overall performance. Common approaches include fixed percentage models, where each trade risks a set percentage of your account, and Kelly-based models that scale with edge. In prediction markets, where outcomes are binary, position sizing is especially critical because every trade either pays out in full or goes to zero.

Mean reversion is a trading strategy based on the expectation that prices will return to their average or fair value after deviating due to temporary factors. In prediction markets, mean reversion opportunities arise when a market overreacts to news, causing the price to spike or crash beyond what the information warrants. The mean-reverting trader bets against the extreme move, expecting the price to settle back toward a more reasonable level as the initial reaction fades and rational analysis prevails. This strategy requires strong discipline and the ability to distinguish between a genuine paradigm shift and a temporary overreaction.

Momentum trading is a strategy that profits from the continuation of existing price trends. When a prediction market price begins moving in a direction — often triggered by new information, polling data, or whale activity — momentum traders enter positions in the direction of the move, betting that the trend will continue. The underlying logic is that markets often underreact initially to new information and take time to fully adjust to fair value. Momentum is strongest during high-volume periods and weakens as the market reaches consensus. The risk is that the momentum reverses, leaving the trader on the wrong side of a fading move.

News trading involves taking positions in prediction markets immediately before or after a significant news event that is expected to move prices. Effective news traders maintain a calendar of scheduled events — data releases, court decisions, policy announcements, debate schedules — and prepare conditional plans for each possible outcome. Pre-news positioning involves entering a trade before the event based on a contrarian or high-conviction view. Post-news trading involves reacting faster than the market to interpret the implications of a result. Speed and preparation are essential, as news-driven mispricings can disappear within minutes.

Correlation trading exploits the statistical relationship between two or more prediction markets that are influenced by shared underlying factors. When correlated markets temporarily diverge from their expected relationship, a correlation trader takes offsetting positions to profit from the convergence. For example, if two markets that normally move in tandem suddenly diverge — one rising while the other stays flat — the correlation trader goes long on the lagging market and short on the leading market, expecting the spread to narrow. This strategy is market-neutral when executed correctly, meaning profits do not depend on the overall direction of either market.

Pairs trading is a market-neutral strategy that involves taking a long position in one market and a short position in a related market to profit from the relative price movement between the two. Unlike directional trading, pairs trading does not depend on whether the overall market goes up or down — only on whether the spread between the two positions converges or diverges as expected. In prediction markets, pairs trades are commonly constructed using markets within the same event category, such as two candidates in the same race or two economic indicators that typically move together.

Fade trading is a contrarian strategy where a trader bets against a recent price move, expecting it to reverse. In prediction markets, fade opportunities arise when the crowd overreacts to news, social media sentiment, or whale activity, pushing a price to an extreme that is not supported by the underlying fundamentals. The fade trader enters a position opposite to the recent move, profiting when the price reverts toward fair value. This strategy requires conviction, patience, and the ability to withstand temporary paper losses as the market may continue moving against you before reversing.

Grid trading is a systematic strategy that places buy and sell orders at regular price intervals above and below the current market price, creating a grid of limit orders. As the price fluctuates within a range, the grid captures small profits on each movement — buying at lower grid levels and selling at higher ones. In prediction markets, grid trading works best in markets that oscillate within a defined range rather than trending in one direction. It is a low-conviction strategy that does not require predicting the direction of the market, only that the price will continue to oscillate. The risk is that the price breaks out of the range and leaves the trader with a large position on the wrong side.

Contrarian trading is a strategy that involves taking positions opposite to the prevailing market sentiment or crowd consensus. The contrarian trader believes that markets frequently overreact to news, herd behavior, and narrative momentum, creating mispricings that can be exploited by going against the crowd. In prediction markets, contrarian opportunities often arise when a market becomes consensus-driven — when nearly all public commentary and social media sentiment pushes in one direction — leaving the other side underpriced. Successful contrarian trading requires strong analytical conviction and the psychological fortitude to hold positions that most people disagree with.

Event-driven trading is a strategy that takes positions based on the expected impact of specific upcoming events — data releases, court rulings, policy announcements, elections, or any scheduled event with a known date. The event-driven trader builds a thesis about the most likely outcome, assesses whether the market has already priced it in, and positions accordingly before the event occurs. This strategy differs from news trading in its emphasis on preparation and pre-positioning rather than real-time reaction. The key skill is estimating how the market will move in response to different outcomes and entering at prices that offer favorable risk-reward across the range of possibilities.

The Sharpe ratio measures risk-adjusted return by comparing excess return to the standard deviation of returns. A higher Sharpe ratio indicates better return per unit of risk taken. In prediction market analytics, it is calculated over a trader's resolved positions to assess whether their returns justify the volatility they experienced. A Sharpe ratio above 1.0 is generally considered good, while above 2.0 is excellent.

The Sortino ratio is a variation of the Sharpe ratio that only penalizes downside volatility, ignoring upside deviations. This makes it a more appropriate measure for traders who have asymmetric return profiles — which is common in prediction markets where large gains on correct calls should not be treated as risk. A trader with a high Sortino ratio generates strong returns without experiencing large losses. 0xInsider displays the Sortino ratio alongside other risk metrics on every trader profile.

Profit factor is the ratio of gross profits to gross losses across all resolved trades. A profit factor of 2.0 means the trader made twice as much on winning trades as they lost on losing trades. Values above 1.0 indicate net profitability, while values below 1.0 indicate net losses. It is a straightforward metric that captures the overall efficiency of a trading strategy without adjusting for risk.

Max drawdown is the largest peak-to-trough decline in a trader's cumulative profit over a specific period. It measures the worst losing streak a trader has experienced and is a critical indicator of risk. A trader with $100K in profits who at one point was down $30K from their peak has a 30% max drawdown. Low max drawdown relative to total returns suggests a more stable, disciplined trading approach.

Win rate is the percentage of resolved trades that resulted in a profit. On 0xInsider, win rate is only displayed once a trader has at least 5 resolved markets — this minimum threshold prevents misleading statistics from tiny sample sizes. While intuitive, win rate alone is not a reliable indicator of skill — a trader can have a 90% win rate but still lose money if their losses are much larger than their wins. Conversely, a trader with a 40% win rate can be highly profitable if their winners are significantly larger than their losers. Win rate should always be evaluated alongside average win size and average loss size.

Profit and loss (P&L) is the total net gain or loss from a trader's resolved positions. In prediction markets, P&L is calculated as the sum of all resolution payouts minus the total cost of all positions. Unrealized P&L reflects the paper gain or loss on positions that have not yet resolved. 0xInsider calculates per-market P&L and cumulative P&L curves to give a complete picture of trader performance over time.

Value at Risk (VaR) is a statistical measure that estimates the maximum expected loss over a given time period at a specified confidence level. For example, a 95% daily VaR of $1,000 means there is a 5% chance of losing more than $1,000 in a single day. In prediction markets, VaR can be estimated from a trader's position sizes and the historical volatility of the markets they are exposed to. It is a standard risk metric used in portfolio management.

The Calmar ratio measures return relative to max drawdown, providing a sense of how much return a trader generates for the worst pain they endure. It is calculated as the annualized return divided by the maximum drawdown over the same period. A high Calmar ratio indicates that a trader achieves strong returns without experiencing deep declines. This metric is particularly useful for comparing traders who operate at different scales.

Alpha represents the excess return generated by a trader above what would be expected from random chance or a simple benchmark strategy. In prediction markets, alpha measures the skill component of a trader's performance after accounting for market conditions and luck. Generating consistent alpha over many trades is the hallmark of a skilled trader. 0xInsider's ranking system is designed to surface traders who demonstrate genuine alpha rather than those who simply got lucky on a few high-profile markets.

Edge is the expected profit per unit of risk, typically expressed as a percentage. A trader with a 5% edge on a market expects to earn $0.05 for every $1 risked. In prediction markets, edge comes from having a more accurate probability estimate than the market consensus. Quantifying your edge before placing a trade is essential for proper position sizing and determining whether a trade is worth making at all.

Expected value (EV) is the average outcome of a trade if it were repeated many times, calculated as the probability-weighted sum of all possible payoffs. A positive EV trade is one where the expected payout exceeds the cost of the position. In prediction markets, EV = (your estimated probability × payout) - (1 - your estimated probability) × cost. Professional traders focus exclusively on making positive EV decisions, knowing that results will converge to expectation over a large sample of trades.

Consistency measures how stable and repeatable a trader's performance is across multiple trades and time periods. A consistent trader generates steady returns without dramatic swings between winning and losing streaks. In 0xInsider's scoring model, consistency is evaluated by analyzing the distribution of returns across resolved markets and penalizing traders whose performance is concentrated in a small number of outsized wins. High consistency combined with positive returns is a strong signal of genuine skill.

The information ratio measures the excess return of a trader relative to a benchmark, divided by the tracking error (the volatility of the excess return). In prediction market analytics, the benchmark is typically the average return of all active traders. A high information ratio indicates that a trader consistently outperforms the benchmark without excessive variability in their outperformance. It is particularly useful for evaluating whether a trader generates genuine alpha or simply takes on more risk than the average participant.

The Treynor ratio measures the return earned in excess of the risk-free rate per unit of systematic risk (beta). While the Sharpe ratio divides excess return by total volatility, the Treynor ratio divides it by beta — the sensitivity of the trader's returns to overall market movements. In prediction markets, the Treynor ratio helps distinguish traders who generate returns from genuine forecasting skill versus those who profit primarily by riding broad market trends. A high Treynor ratio indicates that returns are driven by independent judgment rather than market beta.

Drawdown recovery time measures how long it takes for a trader's cumulative P&L to recover from a trough back to its previous peak. A short recovery time indicates resilience and the ability to bounce back from losses quickly. A long recovery time — especially one that stretches across months — suggests the trader may be struggling to regain their edge or is compounding losses. This metric is especially informative in prediction markets where traders face binary outcomes: a recovery that takes too long may indicate that the trader's initial success was driven by luck rather than a repeatable process.

Beta measures the sensitivity of a trader's returns to the overall prediction market returns. A beta of 1.0 means the trader's returns move in lockstep with the market average. A beta above 1.0 means returns amplify market movements — the trader does better than average when the market is profitable and worse when it is not. A beta below 1.0 indicates more independent returns. In prediction markets, low-beta traders generate their returns from idiosyncratic skill rather than broad market conditions, making their track records more likely to persist across different market environments.

Risk-adjusted return is any measure of profit that accounts for the amount of risk taken to achieve it. Raw returns alone are misleading because a trader who earns 50% while risking 80% drawdowns is taking far more risk than one who earns 30% with a 10% maximum drawdown. Common risk-adjusted return metrics include the Sharpe ratio (return per unit of total volatility), the Sortino ratio (return per unit of downside volatility), and the Calmar ratio (return per unit of maximum drawdown). 0xInsider uses risk-adjusted metrics as the primary inputs to its trader grading system because they are far more predictive of future performance than raw P&L.

Expectancy is the average amount a trader expects to win or lose per dollar risked on each trade. It is calculated as: (win rate times average win) minus ((1 minus win rate) times average loss). Positive expectancy means the strategy is profitable over a large number of trades. Negative expectancy means the strategy loses money regardless of any individual winning streak. Expectancy is one of the most fundamental metrics in prediction market trading because it tells you whether a strategy should be scaled up (positive) or abandoned (negative). Even a small positive expectancy, compounded over hundreds of trades, produces significant returns.

Capital efficiency measures the return generated relative to the total capital deployed, calculated as P&L divided by total trading volume. A capital-efficient trader extracts more profit per dollar deployed, meaning their capital is working harder. In prediction markets where capital is locked until resolution, efficiency is particularly important — capital tied up in a low-return position is capital that cannot be used for higher-return opportunities. 0xInsider uses capital efficiency as one of the six components in its trader scoring system, rewarding traders who achieve strong returns without deploying excessive capital.

The Brier score is a scoring rule that measures the accuracy of probabilistic predictions. It is calculated as the mean squared difference between predicted probabilities and actual outcomes (0 or 1). A perfect Brier score is 0 (all predictions were exactly correct), while a score of 1 is the worst possible. In the context of prediction markets, the Brier score can evaluate how well a market's prices or a trader's positions predicted the actual outcomes. A Brier score below 0.25 is better than random guessing (which scores 0.25 on binary events), and scores below 0.15 indicate strong calibration.

Return on investment (ROI) in prediction markets is the percentage profit or loss relative to the total capital deployed. It is calculated as (total payout minus total cost) divided by total cost, expressed as a percentage. A positive ROI means you made money; a negative ROI means you lost. While ROI is intuitive and widely used, it has limitations as a standalone metric — it does not account for the time capital was locked up, the risk taken, or the number of trades involved. A 50% ROI on a single lucky bet is less impressive than a 50% ROI across 100 carefully researched positions. ROI should always be evaluated alongside risk-adjusted metrics like the Sharpe ratio and consistency scores.

Daily P&L (profit and loss) is a mark-to-market calculation that shows how much a trader's portfolio value changed on each day. Unlike cumulative P&L which shows the running total, daily P&L isolates each day's contribution — factoring in both realized gains from trades and unrealized changes from price movements on open positions. On 0xInsider, daily P&L is displayed on trader profile charts and helps identify whether a trader's returns are steady or concentrated in a few big days.

Polymarket is a decentralized prediction market platform built on the Polygon blockchain where users trade on the outcomes of real-world events using USDC. It uses a central limit order book (CLOB) for price discovery and conditional tokens (ERC-1155) for outcome representation. Polymarket has emerged as the largest prediction market by volume, processing billions of dollars in trades across politics, crypto, sports, and current events. It is the primary platform tracked by 0xInsider.

Kalshi is a CFTC-regulated prediction market exchange based in the United States that allows users to trade event contracts with real USD. As a designated contract market (DCM), Kalshi operates under strict regulatory oversight and requires full KYC verification for all users. The platform covers markets in economics, politics, weather, science, and finance. Kalshi's regulatory compliance makes it one of the few legal prediction market platforms available to US residents.

Metaculus is a forecasting platform that focuses on aggregating probability estimates from a community of forecasters rather than using real-money trading. Users submit their probability estimates for questions, and Metaculus combines these into a community prediction using a weighted aggregation model. While not a trading platform, Metaculus has built a strong reputation for forecast accuracy and is widely used by researchers and effective altruism communities. Its community predictions can serve as a reference point for prediction market traders.

PredictIt was a political prediction market operated by Victoria University of Wellington under a CFTC no-action letter. It allowed US residents to trade on political events with real money, subject to an $850 per-market position limit. The CFTC withdrew its no-action letter in 2023, and PredictIt has been winding down operations. Despite its limitations, PredictIt was historically significant as one of the few legally accessible political prediction markets in the United States.

Augur is a decentralized prediction market protocol built on Ethereum that launched in 2018. It was one of the earliest attempts to create a fully decentralized, permissionless prediction market using smart contracts and a decentralized oracle system. While Augur pioneered many concepts used by modern prediction markets, it struggled with high gas fees, complex UX, and low liquidity. Augur's technology influenced later platforms, but it has largely been superseded by more user-friendly alternatives like Polymarket.

The Conditional Token Framework (CTF) is a smart contract standard developed by Gnosis for creating and trading conditional outcome tokens. Polymarket uses CTF to create ERC-1155 tokens that represent positions in prediction markets. The framework supports combinatorial markets where tokens can represent complex conditional outcomes. CTF enables the creation of deep, composable markets where positions can be split, merged, and transferred on-chain.

USDC (USD Coin) is a regulated stablecoin pegged 1:1 to the US dollar, issued by Circle. On Polymarket, USDC on the Polygon network is the sole currency used for trading — all deposits, withdrawals, and settlements are denominated in USDC. Because each outcome token resolves to either $1 or $0 in USDC, the stablecoin provides a clear and consistent unit of account for prediction market positions.

CLOB stands for Central Limit Order Book, which is the order matching system used by Polymarket. Unlike AMM-based DEXs that use liquidity pools and bonding curves, the CLOB model matches individual limit orders from buyers and sellers based on price-time priority. This architecture provides better price discovery, tighter spreads, and more control for sophisticated traders. Polymarket's CLOB is operated off-chain by an operator, with settlement happening on-chain via the Polygon network.

Manifold Markets is a play-money prediction market platform that allows anyone to create and trade on questions about future events. Unlike Polymarket and Kalshi, Manifold uses a virtual currency (mana) rather than real money, lowering the barrier to entry and enabling a much wider range of markets — including personal, community, and speculative questions that would not attract real-money liquidity. While play-money markets are generally less accurate than real-money ones due to weaker incentive alignment, Manifold's large and active community has demonstrated surprisingly strong forecasting performance on many topics. The platform is popular among rationalist and effective altruism communities.

Insight Prediction is a real-money prediction market platform that aims to bridge the gap between crypto-native platforms and fully regulated exchanges. It offers trading on political, economic, and current event markets with a focus on user experience and accessibility. Insight Prediction has positioned itself as an alternative for traders seeking real-money prediction markets without the full crypto complexity of Polymarket or the regulatory constraints of Kalshi. The platform supports multiple deposit methods and offers both web and mobile trading interfaces.

Probable Markets is a prediction market platform operating on BNB Chain (BSC) that offers trading on sports, politics, crypto, and current events. Unlike Polymarket (Polygon-based) and Kalshi (CFTC-regulated exchange), Probable runs on Binance Smart Chain and is one of the newer entrants in the prediction market space. 0xInsider tracks whale trades on Probable alongside Polymarket and Kalshi, though trader identity is limited to wallet addresses — Probable does not provide usernames or public profiles. The platform's data coverage on 0xInsider is expanding as the platform grows.

The UMA (Universal Market Access) optimistic oracle is the resolution mechanism used by Polymarket to determine market outcomes. When a market's event concludes, anyone can propose an outcome through the oracle. The proposed outcome is accepted by default after a challenge period unless someone disputes it by posting a bond. If disputed, the resolution goes to UMA token holders who vote on the correct outcome. This optimistic model — assume proposals are correct unless challenged — is efficient for the vast majority of markets while providing a dispute mechanism for ambiguous or contested outcomes. Understanding how the UMA oracle works is important for traders because resolution timing and potential disputes can affect the finality of payouts.

The Commodity Futures Trading Commission (CFTC) is the US federal agency that regulates futures, options, and swaps markets, including event contracts traded on prediction markets. The CFTC has jurisdiction over prediction markets that are classified as commodity derivatives or event contracts. Kalshi operates as a CFTC-regulated designated contract market (DCM), while Polymarket has faced CFTC enforcement actions due to operating without registration. The CFTC's regulatory stance significantly shapes which prediction markets are legally accessible to US residents.

Event contract regulation refers to the legal framework governing prediction market contracts in the United States, primarily under the Commodity Exchange Act (CEA). The CFTC can approve event contracts for listing on regulated exchanges but has the authority to block contracts it deems contrary to the public interest, such as those involving terrorism, war, or assassination. The regulatory landscape has evolved significantly since 2020, with ongoing debates about which event categories should be permissible for trading.

A Designated Contract Market (DCM) is a CFTC-regulated exchange authorized to list and trade futures and event contracts. Kalshi holds a DCM license, making it one of the few prediction market platforms with full US regulatory approval. DCM operators must comply with extensive requirements around market surveillance, reporting, capital adequacy, and customer protection. The DCM framework provides legal certainty for traders but imposes significant compliance costs on operators.

Know Your Customer (KYC) is a regulatory requirement that financial institutions verify the identity of their users before allowing them to transact. On regulated prediction market platforms like Kalshi, KYC involves submitting government-issued identification, proof of address, and sometimes source-of-funds documentation. Polymarket does not require KYC for basic trading but has implemented geo-blocking for US users. KYC requirements create friction for onboarding but are necessary for platforms operating within regulated financial frameworks.

Anti-Money Laundering (AML) refers to the set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. Regulated prediction market platforms must implement AML programs that include transaction monitoring, suspicious activity reporting, and recordkeeping. AML compliance is closely tied to KYC requirements — knowing who your customers are is the first step in detecting suspicious financial activity.

A binary option is a financial instrument that pays a fixed amount if a specified condition is met and nothing otherwise. Prediction market contracts are structurally similar to binary options, which has created regulatory complexity because binary options are heavily regulated or banned in many jurisdictions. In the US, binary options can only be legally traded on CFTC-regulated exchanges. The distinction between event contracts (legal on DCMs) and binary options (often associated with fraud) is an ongoing area of regulatory focus.

The legal status of prediction markets varies significantly by jurisdiction. In the United States, prediction markets are legal when operated on CFTC-regulated exchanges like Kalshi, but unregulated platforms face enforcement risk. Crypto-based platforms like Polymarket operate in a legal gray area, especially for US users. Internationally, prediction markets face different regulatory regimes — some countries treat them as gambling, others as financial instruments, and many have no specific framework at all.

CFTC oversight refers to the regulatory supervision that the Commodity Futures Trading Commission exercises over prediction markets that are classified as event contracts or commodity derivatives in the United States. This oversight includes market surveillance for manipulation, financial reporting requirements, customer fund segregation rules, and the authority to approve or deny new types of event contracts. Platforms operating under CFTC oversight — such as Kalshi, which holds a Designated Contract Market license — must comply with extensive regulations that protect traders but also limit the types of markets that can be offered. The CFTC's evolving stance on prediction markets continues to shape the industry's regulatory landscape.

Securities classification determines whether a prediction market contract is regulated as a security under US federal law. If a prediction market token or contract is deemed a security by the SEC, it would need to be registered and traded on a licensed securities exchange, subjecting it to a different and potentially more restrictive regulatory regime than the CFTC framework. The classification depends on factors like whether the contract represents an investment of money in a common enterprise with an expectation of profits derived from the efforts of others — the criteria established by the Howey test. Most prediction market platforms structure their contracts to avoid securities classification, but the legal boundaries remain uncertain.

A no-action letter is a written statement from a regulatory agency stating that the agency will not take enforcement action against a specific entity for a specified activity. PredictIt operated under a CFTC no-action letter that allowed it to run a prediction market for academic research purposes, subject to strict conditions including an $850 per-market position limit and restrictions on market types. The CFTC's withdrawal of PredictIt's no-action letter in 2023 effectively ended the platform's operations and demonstrated that no-action letters provide a less stable regulatory foundation than a full exchange license like Kalshi's DCM designation.

KYC (Know Your Customer) requirements are regulatory mandates that financial platforms verify the identity of their users before providing services. In prediction markets, KYC requirements vary significantly by platform and jurisdiction. Kalshi, as a CFTC-regulated exchange, requires full identity verification including government ID, Social Security number, and proof of address. Polymarket, operating as a crypto-native platform, does not require KYC for basic trading. The presence or absence of KYC requirements fundamentally shapes a platform's user base, trading volume, and regulatory risk profile.

AML (Anti-Money Laundering) compliance refers to the policies, procedures, and systems that prediction market platforms implement to detect and prevent money laundering, terrorist financing, and other financial crimes. Regulated platforms like Kalshi maintain comprehensive AML programs that include transaction monitoring, suspicious activity reporting to FinCEN, customer due diligence, and enhanced due diligence for high-risk users. AML compliance is closely linked to KYC requirements — effective money laundering detection depends on knowing who your customers are and monitoring their transaction patterns for anomalies.

Wash trading is the practice of simultaneously buying and selling the same asset to create the illusion of trading activity without actually changing the beneficial ownership. In prediction markets, wash trading can artificially inflate volume metrics, manipulate prices, or create false signals of market interest. On blockchain-based platforms like Polymarket, wash trading is detectable through on-chain analysis — transactions between related wallets, circular fund flows, and patterns of self-dealing can be identified by analyzing the blockchain. Wash trading is illegal on regulated exchanges and is considered market manipulation on all platforms.

Market manipulation in prediction markets refers to any deliberate attempt to artificially influence prices or outcomes for personal gain. Common forms include spoofing (placing large orders with no intention of executing them to mislead other traders), wash trading (creating fake volume), cornering (accumulating a dominant position to control the market), and outcome manipulation (attempting to influence the actual event the market is based on). While prediction markets are designed to aggregate genuine information, their financial incentives can also attract manipulative behavior. On-chain transparency helps detect manipulation, but enforcement remains challenging on decentralized platforms.

The Whale Digest is 0xInsider's email alert system that sends summaries of significant whale trades directly to your inbox. Users can customize their digest with preferences including frequency (daily or weekly), minimum trade size ($10K+, $25K+, $50K+, or $100K+), and market categories (crypto, politics, sports, etc.). Daily digests are sent every morning at 8 AM UTC; weekly digests go out every Monday at 8 AM UTC. The digest helps traders stay informed about large trades without needing to monitor the terminal continuously.

The Watchlist is a feature on 0xInsider that allows logged-in users to follow specific traders and track their activity over time. When you add a trader to your watchlist, their profile appears in your personal dashboard with key stats like total P&L and win rate. Watchlisted traders are also synced more frequently (every hour instead of on-demand), ensuring their data stays current. The watchlist helps you build a curated list of traders whose moves you want to monitor closely.

Category leaderboards on 0xInsider rank traders by their performance within specific market categories such as Crypto, Politics, NBA, NFL, Soccer, and more. Each category page shows the top traders by category-specific P&L, their grades, win rates, and the latest whale trades in that category. This allows you to find the best traders in the domains you care about — a trader who excels in crypto markets may have no edge in politics, and category leaderboards make this distinction visible.