Prediction markets let you trade event contracts based on what you think may happen in the real world.
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By Ekaterina Drozdovica
From elections and economic reports to sports results – instead of trading a traditional asset, you buy or sell contracts linked to a specific event outcome.
This article is for informational purposes only and should not be construed as financial or investment advice. Past performance does not guarantee future results.
Prediction market terms for beginners
Before trading prediction markets, it helps to understand some key terms. One common question is: what is an event contract? The table below breaks down the main terms and what they mean.
Term
Definition
Event contract
A derivative financial product based on the outcome of a specific event.
Binary option
A contract structure where the payoff is typically a fixed amount (like $1.00) if the event occurs, or $0.00 if it does not.
Settlement
When the result is confirmed, open positions are settled automatically. Contracts on the correct outcome receive the maximum payout, usually $1.00, whereas contracts on the losing side expire with no payout.
Order book
A list of buy and sell orders that helps determine the current market price through transparent price discovery.
How to read an event contract
When reviewing event contracts, you’ll usually see two outcomes, which you can trade on, and profit if you’re correct.
For example, when reviewing contracts on a sports event, you may see the two teams playing against each other. Or, looking at contracts in financial events, you may see the price targets for a specific asset such as gold.
Each contract typically has a deadline and an official settlement source. This source is the data provider used to confirm the final result. Before trading, it’s important to check these details so you understand exactly what happens if the contract settles or doesn’t settle in your favor.
Understanding an event contract price
In a prediction market, the price of a contract reflects the probability of an event happening, according to that market. Prices typically range between $0.01 and $0.99.
For example, If an event contract for a team to win a baseball game is priced at $0.40, the prediction market suggests there is only a 40% probability of that outcome. Prices move in real-time as participants react to new information.
Choosing the prediction market types for your knowledge
It’s important to trade prediction markets only when you’ve done your research and understand the event you’re trading on.
Like any market, prediction markets carry risk. Outcomes can be uncertain, prices can move quickly, and the final result may depend on specific settlement rules. Before taking a position, make sure you understand what the contract is asking, how it will be resolved, and what you could lose.
Here are some the types of prediction markets on OG.com.
Economics
There are usually based on the upcoming scheduled economic data events, for example:
Inflation data: Typically on whether the Consumer Price Index (CPI) will meet specific targets.
Interest rate decisions: Predictions on upcoming central bank events from the Fed, European Central Bank (ECB), and more.
Employment reports: Predictions on monthly jobs data or unemployment rates.
However, some of the events may be more context-specific, for example, “More tech layoffs in 2026 than in 2025?”
These contracts are usually based on whether a financial asset will reach a certain price by a specific time. The asset could be a currency pair, index, or commodity.
For example, a contract might focus on the EUR/USD pair at 12 p.m. today, with different contracts available for different price targets.
Similarly to financial assets, contract events are framed around price targets for various coins, such as Bitcoin (BTC) and Ethereum (ETH). This could sound like: “When will Bitcoin cross $100,000 again?” “Ethereum all-time high by” with multiple date targets available.
These events are linked to specific companies, whether public or private. They may focus on stock performance, earnings reports, initial public offerings (IPOs), or other corporate milestones. For example, the event contracts may sound like:
“Company with best AI model at the end of June 2026”
“Company to announce IPO in 2026”
“What will [company X] do after earnings?”
Politics
Like economic events, many political events often follow a scheduled timeline. You can typically trade event contracts on them. For example:
Election results: These events could include a whole spectrum of elections: from local, state, to national. For example, district primary winners, mayoral elections, presidential nominees and more.
Legislative milestones: This contract could be tied to whether a bill may pass through a governing body.
However, there are also contracts that are context-based, for example: “Party to control US senate in 2026”.
As with any event contract, it’s important to understand the question being asked, the deadline, and the official source used to confirm the outcome.
There are prediction markets for climate-related events. For example, they could be based on the temperature targets for a certain day. Or, rank the hottest years on record.
Yes. In the United States, prediction markets must be registered as Designated Contract Markets (DCMs) with the Commodity Futures Trading Commission (CFTC) to offer retail access to event contracts. However, New York and Arizona residents are not allowed to trade on any markets. Nevada, Ohio, Michigan, Maryland, Massachusetts, New Jersey and Illinois residents are not allowed to trade on Sports contracts. You are allow to trade other categories like elections and economic indicators.
How much money do I need to start?
Contracts are typically priced under $1.00, making them accessible. However, you should check for any minimum deposit requirements on the platform.
Is this the same as gambling?
No. Regulated prediction markets trade derivative contracts (swaps) on an exchange. Unlike a sportsbook, the exchange matches buyers and sellers directly and does not take the opposite side of your trade.
Why do prices move?
Prices change as traders react to new information, demand, and market sentiment. A contract’s price suggests the market’s implied probability of the event happening.
What happens if the outcome goes against me?
If your prediction is wrong, the contract typically settles at $0.00. In most cases, the maximum loss is limited to the amount paid for the contract, plus any applicable fees.
Can I trade prediction markets with crypto?
Some platforms support cash, crypto, or both as funding options. Availability depends on the platform and the user’s region.
What should beginners watch out for?
Beginners should check the event wording, deadline, settlement source, fees, and maximum loss before trading. Outcomes can change quickly as new information appears
Important Information: Prediction is an event contract that is a derivatives product offered by North American Derivatives Exchange, Inc. (NADEX), a CFTC-regulated exchange, which does business under the brand OG.com Prediction Markets (OG) Crypto.com | Derivatives North America and uses a CFTC-regulated exchange that uses OG.com technology.
Trading on OG.com involves risk and may not be appropriate for all. By trading you risk losing your cost to enter any transaction, including fees. You should carefully consider whether trading on OG.com is appropriate for you in light of your investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk
