> ## Documentation Index
> Fetch the complete documentation index at: https://docs.liquid.trade/llms.txt
> Use this file to discover all available pages before exploring further.

# How prediction markets work

> Trade the outcome of real-world events with YES and NO shares priced between $0 and $1.

Prediction markets let you trade on whether something will happen: an election, a game, a Fed decision, or where Bitcoin closes today.

## Prices are probabilities

Every market asks a question with outcomes, usually **Yes** and **No**. Each share trades between \$0 and \$1, and the price reads as the market's probability. A **Yes** share at 62¢ means the market puts the outcome at about 62%.

<Frame caption="How a prediction pays out">
  <video src="https://mintcdn.com/liquidmax/OXdL6Nt1RIYwOMy4/videos/trading/prediction-payout.mp4?fit=max&auto=format&n=OXdL6Nt1RIYwOMy4&q=85&s=b0e3477707d078536fda976e9ca27379" autoPlay loop muted playsInline aria-label="A question card shows Yes at 62 cents and No at 38 cents. You buy 100 Yes shares for 62 dollars. The event resolves Yes, each share pays 1 dollar, and 100 dollars lands in your balance, a gain of 38 dollars." data-path="videos/trading/prediction-payout.mp4" />
</Frame>

When the event resolves:

* Shares of the winning outcome pay out **\$1** each.
* Shares of the losing outcome pay out **\$0**.

$$
\text{Profit} = (\$1 - \text{price paid}) \times \text{shares}
$$

**Example:** You buy 100 **Yes** shares at 40¢ for \$40. If the outcome happens, you receive \$100, a profit of \$60. If it doesn't, you lose your \$40.

You don't have to wait for the result. You can **Cash Out** at the current price at any time to lock in a gain or cut a loss.

## No leverage, no liquidation

Prediction shares are bought in full, so there's no multiplier, no margin, and no liquidation. The most you can lose is what you paid.

## What you can trade

Markets are grouped into categories: **Crypto**, **Stocks**, **Indices**, **Commodities**, **FX**, **Sports**, **Economics**, **Politics**, and **Other**. **Up Down** markets are short rolling markets, such as whether an asset is higher or lower in 15 minutes.

## Balance and fees

Prediction trades use your Liquid balance, the same USDC you trade perps with. See [Move funds](/account/move-funds) if your account isn't unified.

The minimum trade is \$10. Liquid charges a 0.90% fee on both buys and sells (0.81% if you joined with a referral code), paid in USDC. See [Fees](/trading/fees#prediction-markets).

Ready to trade? See [Trade prediction markets](/predictions/trade-predictions).


This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.